ZTE moved to a net loss of CNY 1.33 billion in the first nine months of 2012, versus a profit of CNY 1.58 billion in the year-earlier period, hurt by a greater share of low-margin contracts in Europe and Asia and increased R&D spending.
Revenues rose 5.0 percent to CNY 60.73 billion, with growth held back by delays in international projects and changes to revenue recognition on carrier contracts in its home market China. Revenue from carrier network equipment fell 5.2 percent, due to a slowdown in wireline and CDMA, while revenue from end-user devices rose 15.4 percent, helped by its expansion in smartphones, and sales of software systems were up 23.3 percent.
ZTE said it would focusing more on cash flow and cost optimisation, after reviewing its strategy in the past quarter in light of maturing infrastructure markets and global economic uncertainties. Free cash flow was still negative in the nine-month period, but the company substantially reduced the deficit by over CNY 7 billion.
The company also plans to build on its position in the infrastructure market to capture more 4G contracts, continue expanding its terminals business in Europe and the US and target the corporate and government markets more, including managed services.
