(Adds details, quotes)
* ZTE Q1 net up by 35.9 pct, misses forecasts
* Investment gains helped push ZTE back to black
* Logged losses in Q3, Q4 and 2012 due to project delays
HONG KONG, April 26 ZTE Corp
, China's second largest telecoms gear maker in
revenue terms, expects an increase in smartphone sales and an
expansion in 4G networks to keep it in profit this year after
posting its first-ever annual loss in 2012.
After two quarters of losses, ZTE on Friday posted a 35.9
percent increase in its first-quarter 2013 net profit, lifted by
gains from selling assets late last year.
ZTE now expects network growth, especially within China, and
higher smartphone sales to keep it in the black. He Shiyou,
executive vice president in charge of handsets, told Reuters in
Beijing ZTE expects sales of its mobile devices to exceed 50
percent of revenue by around 2028 from 31 percent in 2012.
"At ZTE, we hope that in the future, mobile devices will
account for more than one-third of revenue," He said. ZTE is
currently the world's sixth largest smartphone maker in terms of
ZTE was plagued by project delays and thinning margins in
emerging markets last year, but analysts expect it to turn a
profit this year.
"ZTE's major profit drivers in 2013 include China Mobile's
capex, Africa market and smartphone business," BOC International
said in a report prior to the earnings release. The brokerage
expects ZTE to turn a 2013 net profit of 562 million yuan
compared to a 2.84 billion yuan loss last year.
ZTE and larger rival Huawei Technolgies Co. Ltd are
expected to benefit the most from plans by China Mobile Ltd
to spend 41.7 billion yuan on developing 4G technology
In the quarter ended March 31, ZTE reported a net profit of
205.0 million yuan ($33 million), up from 150.9 million yuan in
the same year-ago period, the company said in a stock exchange
The figure was below the 220 million yuan quarterly profit
forecast by three analysts polled by Reuters, and included
around 800 million yuan of gains from the sale of stakes in
several units last year.
The quarterly results came after the market closed. ZTE's
Hong Kong shares, which have fallen by about 5 percent since the
beginning of this year, ended down 0.5 percent, lagging the main
Hang Seng Index's 0.7 percent gain.
(Reporting by Lee Chyen Yee in HONG KONG and Megha Rajagopalan
in BEIJING; editing by Miral Fahmy)