ZTE, who many people know because of their cheap Android handsets, is also in the business of providing infrastructure equipment to operators. According to Mobile Business Briefing, the company has issued a warning that profits for the first half of 2012 are going to be between 60% and 80% lower than profits during the same time last year. How low is low? We’re looking at $24 million here, which is barely break even. Rumors are now floating around that the company intends to cut around 12,000 jobs, many of which are outside of China.
So why is ZTE in such bad shape? The report suggests that the current economic situation in Europe is partially to blame, that and operators in China are delaying rolling out new networks. If you think about it, Nokia is facing the same issues. Quarter after quarter, it’s the network side of the company, Nokia Siemens Networks, that’s having trouble with their finacnes. It seems that the only people who can make money off of selling cell towers are Ericsson and Huawei.
Anyway, what does all this mean for you? Probably nothing since chances are you’re not buying a ZTE smartphone. And as for their networking gear, there’s a high probability that if you’re reading this you’re either in Europe or the United States. Those countries mainly rely on equipment from Ericsson, Alcatel-Lucent, and Nokia Siemens Networks. So again, you’re not going to be impacted.
And as for the 12,000 people who are going to lose their job … there’s something to be said about the fact that many of them are based outside of China. That means ZTE wants to focus on their home market, which by the way became the largest smartphone market late last year. Maybe repositioning the company to target their home market will prove to be a good idea in the long term?