On the evening of March 27, ZTE disclosed its annual report, with a loss of 6.983 billion yuan in 2018 and a profit of 4.568 billion yuan in the same period of last year. ZTE's total revenue in 2018 was 85.5 billion yuan, down 21.4% from 2017. However, ZTE expects to make a profit of 800-12 billion yuan in the first quarter of this year. What's the matter with ZTE's loss of 7 billion? What is the reason for ZTE's loss of 7 billion yuan?
2018 is a difficult year for ZTE, because the US Department of Commerce imposed an export ban on ZTE in April, which means that ZTE cannot obtain any software, original hardware and components from US companies. Three months later, ZTE and the United States announced an agreement to pay a $1 billion fine and overhaul its board of directors and executive team. The ban has been implemented.
ZTE reported a net profit of 276 million yuan (US $41 million) and revenue of 26.7 billion yuan in the three months from October to December, Reuters reported. But the combination of export bans and fines resulted in a loss of Rmb7 billion (US $1 billion) in 2018. This loss is within the company's own estimated loss range, ranging from 6.2 billion to 7.2 billion yuan.
According to counterpoint research, ZTE was the fourth most popular smartphone brand in the United States in the first quarter of 2018, with a market share of 11%. However, from the second quarter to the end of this year, ZTE fell out of the top five because of the US ban. ZTE expects a net profit of 800-1.2 billion yuan in the first quarter of 2019, compared with a loss of 5.407 billion yuan in the same period last year.