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ZTE Warns that it may Post Full Year Loss for 2012

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China's ZTE has warned that it expects to post a full year loss of between RMB2.5 billion and RMB2.9 billion (US$400 460 million) for 2012. The company blamed delays in deployments of domestic and international network projects, the recognition of earlier lower margin contracts and a drop in revenue for mobile devices.

The company is currently executing its review begun last year to sharpen its focus on key products and markets and strengthen cash flow management. ZTE is generating net cash inflows from operations as the company recorded higher sales collection, achieved increased profitability on new contracts, applied stringent cost controls and recognised investment gains.

The company accepted that as its sought to adapt to changes in its business, the company did not respond to shifts in telecommunications industry and macroeconomy with sufficient speed, and has further room to improve its internal controls.

At the start of the year, the board of directors has made management-level changes based on operational performance. As the company aims to increase revenue and profit, it will strictly monitor costs by maintaining controls on the growth in employee numbers, reducing unnecessary consumption, and improve efficiency. Secondly, the company will sharpen its focus on mainstream customers and products, improving internal coordination to ensure resources are channeled into the development and innovation of key projects.

Thirdly, the company will streamline its internal organisation to form simplified, three-layer structure, comprised of headquarters, operational division and representative office, thereby eliminating some regional and structural groupings.

That last one is usually code for job redundancies.

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Tags: zte  China