Recently, ZTE has been in the news a lot here in the US, largely due to the fact that they were not following the sanctions that the US had in place with certain territories like Iran and North Korea. ZTE was not supposed to be exporting products to Iran and other countries, but were doing so anyways. The US had been investigating this for quite some time, and gave them a few reprieves, but a few weeks ago ZTE and the regulators in the US announced that the Chinese firm would be paying a $892 million fine. Which in-turn ended up making ZTE post a huge net loss for the fourth quarter. They are posting a $760 million net loss, which means without the fine, they would have had around a $132 million net profit for the quarter.
On the bright side for ZTE, revenue did rise for the company, about 24.6% in the quarter that ended in December, compared to the quarter prior. Now it does seem a bit late to be reporting earnings for the fourth quarter, considering the first quarter ends next week. But ZTE did need to delay their earnings due to the US sanctions case in the US. Earlier this month, they had agreed to pay the largest penalty ever for a US sanctions case, and the agreement became effective today, March 22nd. The other option for ZTE, in this case, would be for the US government to ban trade for ZTE, which would cut off their supply chain and keep them from working with US companies like Google, Microsoft and Qualcomm. All three are companies that ZTE already works closely with – arguably Google and Qualcomm more than Microsoft, since ZTE makes Android devices and powers them with Qualcomm chipsets, typically.
ZTE recently announced a few new smartphones at the CES and MWC trade shows in January and February respectively. So it’s not all doom and gloom for the Chinese smartphone maker. Of course, this fine did really put a hamper on their Q4 results, they should be able to rebound fairly quickly in the following quarters, with the launch of the Blade V8 series of smartphones.