Reuters: Global Markets: ZTE shares slump to three-year low on profit warning, U.S. probe

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ZTE shares slump to three-year low on profit warning, U.S. probe Jul 16th 2012, 02:25 Tweet Share this Email Print Related News China's Lenovo inches closer to a global tech title 6:37pm EDT Analysis: U.S. criminal inquiry puts much at risk for ZTE 1:58am EDT Billionaire HK property tycoons charged in bribery case Fri, Jul 13 2012 FBI probes China's ZTE over Iran tech deals: report Fri, Jul 13 2012 UPDATE 4-FBI probes China's ZTE over Iran tech deals-report Fri, Jul 13 2012 Analysis & Opinion Wen's stimulus medicine may not be best for China Chinese IP awareness, sown by West, bruises Apple Related Topics Hot Stocks » Asian Markets » Employees of ZTE chat on the roof of its headquarters in Shenzhen, Guangdong province, April 17, 2012. Credit: Reuters/Tyrone Siu HONG KONG | Sun Jul 15, 2012 10:25pm EDT HONG KONG (Reuters) - Shares of ZTE Corp (0763.HK), the world's fifth-largest telecommunications equipment maker, fell to their lowest in more than three years in Hong Kong, weighed down by a profit warning and an investigation by the U.S. government. The stock slumped 17.4 percent to as low as HK$10.32, the weakest intraday level since March 4, 2009, with trading volume more than doubling that of its 30-day average. Shares in the Chinese telecoms equipment maker have more than halved in value since the beginning of the year. Telecoms equipment manufacturers including Huawei Technologies Co Ltd HWT.UL have been hit by sluggish global telecom spending, with ZTE saying last week that first-half profit could slide as much as 80 percent. "The slowing network sales growth, combined with the less investment gain and exchange loss, make us more cautious on its near-term earnings visibility," Barclays said in a report. "Most of these, especially the gross margin pressure, are not likely to turnaround anytime soon," said Barclays, which has an equal rating on the stock. Stiff competition in the mobile phone business in China, the world's biggest market by subscribers, have narrowed margins. ZTE's gross profit margin fell 2.03 percentage points to 30.26 percent last year, according to its annual report. The profit warning comes as a report emerged that the FBI has opened a criminal investigation into the Shenzhen-based company over the sale of banned U.S. computer equipment to Iran and its alleged attempts to cover it up and obstruct a Department of Commerce probe. An investigation by the European Union Commission on whether Huawei and ZTE have accepted illegal subsidies from the Chinese government has also pressured ZTE's shares in the past month. (Reporting by Lee Chyen Yee; Editing by Ryan Woo) Related Quotes and News Company Price Related News Tweet this Link this Share this Digg this Email Reprints Comments (0) This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

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