China's ZTE Expects Up to $1.3 Billion in First-Half Losses
(Bloomberg) -- Chinese telecommunications giant ZTE Corp. said it could report a loss of as much as 9 billion yuan ($1.3 billion) for the first half of the year after sanctions imposed by the U.S. crippled its operations.
Loss in the six months through June could be between 7 billion yuan and 9 billion yuan due to the suspension of major operating activities and a $1 billion penalty it agreed to pay in June, the Shenzhen-based company said in a filing to the Hong Kong stock exchange on Friday. It posted a profit of 2.3 billion yuan in the same period last year.
ZTE got into trouble in 2016 for violating U.S. laws restricting the sale of American technology to Iran and North Korea, ultimately resulting in a seven-year ban by the Department of Commerce. It signed an agreement with the Trump administration this month that would allow it to resume doing business with American suppliers.
The company has sacked its entire board and appointed a new chairman to meet conditions set forth by the White House. Its new management faces the challenge of rebuilding trust with phone companies and corporate customers. But the communications-gear maker is said to be facing at least $3 billion in total losses from a months-long moratorium that choked off the chips and other components needed to make its networking gear and smartphones.
Shares of the firm have tumbled 46 percent since they resumed trading in Hong Kong on June 13, following an almost two-month suspension.
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