ZTE posts first-quarter profits up 16%, focus on handsets overseas

ZTE Corp., the second-largest telecommunications equipment manufacturer in China, announced net profits for the first quarter grew by 16% to $19.37 million and reported a 14% increase in operating revenue to $2.3 billion for the first quarter of the year, ending on March 31.
The results met previous forecasts, with analysts predicting overseas business to continue growth for the rest of 2011. ZTE has kept pace with other rivals such as fellow Chinese company Huawei Technologies Co. Ltd., Ericsson and Nokia Siemens Networks, as demand for infrastructure and handsets dominate China and sales abroad.
Both ZTE and Huawei provide network equipment for China Telecom Corp. Ltd., China Mobile Ltd., and China Unicom Ltd. While expanding overseas, primarily in U.S. and European markets, ZTE and Huawei have faced problem due to national security and intellectual property issues.
Ericsson recently filed a patent infringement lawsuit against ZTE in the United Kingdom and is expected to file litigation against ZTE in Germany and Italy, while Huawei’s plans to acquire business in the U.S. have attracted concerns of national security.
Revenue generated by the segment of carriers’ networks grew by 1.57% compared to the same period last year, reflecting the increase in sales of wireless systems, wireline switches and access systems. Sales revenue from terminal products grew by 51% compared to the same period last year, primarily driven by revenue generated from the sales of 3G, GSM, and CDMA handsets and data card products. There was a slight decline of 0.26%, year-on-year, in the sales revenue of telecommunications software systems, services and other products.
ZTE plans to grow through broadband penetration, upgrades to wireless network equipment and demands for smart terminals in the global market.