ZTE: Expect 30% Increase in Smartphone Revenue This Year

ZTE: Expect 30% Increase in Smartphone Revenue This Year


By Juro Osawa

HONG KONG--ZTE Corp. (0763.HK) said Monday that it expects its revenue from smartphones to increase 30% this year, as the Chinese handset maker tries to benefit from the rapid growth in China's smartphone market while also seeking expansion in Europe and the US

ZTE, whose biggest business is supplying telecommunications equipment to mobile carriers, has seen its smartphone sales volume grow fast in recent years. In a statement released Monday, the company said its smartphone sales doubled last year from 2011. The company, which also sells traditional cellphones, said that its smartphone revenue accounted for 70% of overall handset revenue.

Last month, ZTE warned that it likely swung to a net loss for last year, citing delays in telecom network projects and a decline in revenue from handsets.

ZTE's mainstay telecom-equipment business, which accounts for more than half of revenue, faced a major setback in the US in October, when a congressional report concluded that ZTE and its larger Chinese rival Huawei Technologies Co. posed a potential national-security threat, citing concerns that their equipment could be used to spy on Americans - allegations ZTE and Huawei strongly denied.

Write to Juro Osawa at juro.osawa@wsj.com

--ZTE expects its revenue from smartphones to increase 30% this year

--ZTE says smartphone revenue accounted for 70% of overall handset revenue last year

(Adds handset data from IDC)

By Juro Osawa

HONG KONG--ZTE Corp. (0763.HK) said Monday that it expects revenue from smartphones to increase 30% this year, as the Chinese handset maker tries to benefit from the rapid growth in China's smartphone market while also seeking expansion in Europe and the US

In a statement Monday, ZTE, whose biggest business is supplying telecommunications equipment to mobile carriers, said its smartphone sales by volume doubled last year from 2011. The company didn't disclose specific figures.

ZTE, which also sells traditional cellphones, said that its smartphone revenue accounted for 70% of overall handset revenue last year.

ZTE's revenue growth target comes as handset makers are trying to tap robust mobile demand in China, which has already overtaken the US as the world's largest smartphone market. In the fourth quarter through December, ZTE was the world's fifth-largest smartphone vendor by shipments with a 4.3% share, behind Samsung Electronics Co., Apple Inc., China's Huawei Technologies Co. and Sony Corp., according to research firm IDC.

Still, price competition is intensifying in China's smartphone market, particularly in the low-end segment, making it more difficult for many handset makers to make money despite continued growth in sales volume. To secure profit margins, ZTE has been trying to sell more handsets in higher price ranges.

At the Mobile World Congress in Barcelona this week, ZTE is unveiling its first smartphone that is powered by Mozilla's Firefox operating system, which is trying to become the third major mobile OS after Google Inc.'s Android and Apple's iOS.

ZTE's handset business was profitable last year, according to a person familiar with the company's business. ZTE hasn't disclosed its earnings for the business segment.

Last month, ZTE warned that it likely swung to a net loss in 2012, citing delays in telecom network projects and a decline in revenue from handsets.

ZTE's mainstay telecom-equipment business, which accounts for more than half of revenue, faced a major setback in the US in October when a congressional report concluded that ZTE and its larger Chinese rival Huawei posed a potential national-security threat, citing concerns that their equipment could be used to spy on Americans - allegations ZTE and Huawei strongly denied.

Write to Juro Osawa at juro.osawa@wsj.com