ZTE faces low profit warning

ZTE faces low profit warning

Shares in ZTE have dropped by as much as 17% as the Chinese vendor faces warnings that its half year profits could drop by up to 80% compared to a year ago.

With its shares at their lowest level in three years, the company is allegedly being investigated by the FBI in connection with the sale of banned equipment to Iran.

In an announcement last Friday, ZTE said its net income for the first half of 2012 was expected to be between Rmb154 million ($24 million) to Rmb308 million ($48 million), compared with Rmb769.3million ($121 million) a year ago.

The company said the drop was due to a reduced investment income, losses from foreign exchange and a drop in domestic revenue.

2012 has already proved to be a difficult year for Chinese telecoms equipment manufacturers. In May, it was revealed that the EU was investigating allegations that ZTE and its Chinese rival Huawei were benefitting from illegal state subsidies.

In March, Huawei was also reportedly banned by the Australian government from participating in a tender to build the country’s National Broadband Network (NBN).

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