The No.5 telecoms equipment and smartphone manufacturer in the world, China's ZTE Corp, announced its third quarter earnings for the July to September period. ZTE's net profit was due to the company's cost-cutting measures and avoidance of the low-margin deals.
ZTE's statement on then Hong Kong Stock Exchange highlighted a net profit of CNY500 to CNY750 million for the first three quarters of this year. The figure was a huge improvement from last year's CNY1.7 billion net loss. Based on Reuters' calculations, ZTE's third quarter earnings would amount to CNY 190 to CNY 440 million, versus a CNY130 million loss in 2012.
ZTE currently vies against Huawei Technologies Co Ltd in the smartphone and telecoms sector. According to analysts, the company imposed a 50% pay reduction by senior executives. It avoided unprofitable telecoms project in the African market. Also, ZTE's venture in the 4G networks was expected to help its turnaround.
"The increase is primarily due to the reasons that the group has strengthened its management over contract profitability by strictly controlling the signing of low gross margin contracts," ZTE said.
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