Bloomberg News

ZTE Plans to Boost 2013 Smartphone Shipments by 50% With LTE

January 30, 2013

ZTE Corp. (000063), China’s second-largest maker of telephone equipment, said it plans to boost smartphone shipments 50 percent this year with a focus on high-end phones that run on fourth-generation, Long-Term Evolution, networks.

ZTE’s smartphone shipments more than doubled to 35 million units last year, from 15.8 million units in 2011, Lv Qianhao, global marketing director at ZTE’s handset division, said at a briefing in Hong Kong today.

The company, based in Shenzhen, is counting on increased sales of smartphones in developed markets such as the U.S., Europe and Japan to help it return to profitability this year after its first estimated annual loss in at least 17 years. Growth in shipments will probably be slower than the company’s expectations, according to Lisa Soh, a Hong Kong-based analyst with Macquarie Group Ltd.

“The smartphone market both domestically and internationally will remain competitive in 2013,” said Soh, who forecasts a 32 percent increase in the company’s smartphone shipments this year and rates the shares the equivalent of a sell. “ZTE may have to sacrifice pricing in order to see significant volume uplift.”

The telephone equipment maker on Jan. 20 month said it had an estimated net loss of as much as 2.9 billion yuan ($466 million) last year citing delays in domestic and international network projects. It had posted a net income of 2.06 billion yuan in 2011.

Brand Recognition

ZTE’s smartphone shipments jumped 48 percent in the fourth quarter of last year to 9.5 million units, capturing 4.3 percent of the global market, researcher IDC said this month. That ranked ZTE fifth worldwide after Samsung Electronics Co., Apple Inc. (AAPL:US) Huawei Technologies Co. and Sony Corp.

“At present, consumers can easily recognize Apple or Samsung branded smartphones,” Lv told reporters in Hong Kong. “We hope consumers can also easily recognize ZTE’s brand in the future.”

ZTE climbed 1.7 percent to close at HK$14.82 in Hong Kong. The shares have declined 30 percent in the past 12 months, compared with an 18 percent increase in the Hang Seng Index.

The company plans to double its share of the U.S. handset market to as much as 10 percent by 2015, ZTE said this month. That would also boost its U.S. sales ranking to fourth from fifth.

The handset maker, which won sales in China by focusing on low-end smartphones costing under $161, is now developing more advanced and expensive models as it tries to lure consumers from Apple and Samsung.

At the International Consumer Electronics Show in Las Vegas this month ZTE unveiled its new flagship handset, the Grand S, designed for Long Term Evolution networks. It has a 5-inch screen and runs Google Inc.’s Android Jelly Bean system, enabled by Qualcomm Inc. (QCOM:US)’s Snapdragon S4 Pro processor.

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net; Jasmine Wang in Hong Kong at jwang513@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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