ZTE went through very rough times last year because of the ban imposed on the company by the U.S. Commerce Department in April 2018. The ban nearly forced the company to shut down but three months later, it reached to deal by paying fines.
However, that ban put a significant toll on the company’s finances. For the year 2018, ZTE — one the leading telecom equipment manufacturer in the world, reported an annual loss of whopping 6.98 billion yuan, which roughly converts to $1.04 billion.
While the loss is within the company’s own estimate of loss ranging from 6.2 billion to 7.2 billion yuan, but it’s worse than the 6.2 billion yuan predicted loss by the analysis of investment firms. The company’s annual gross is reported to be 85.5 billion yuan in 2018, down 21.4% from 2017.
It’s noteworthy that the company did manage to get the things back to normal during the last quarter of 2018, i.e. from October to December during which the company posted a 276 million yuan net profit, which roughly converts to $41 million, with revenue amounting to 26.7 billion yuan.
Shenzhen-based ZTE mainly attributed its biggest annual loss to the $1 billion penalties that the company paid to the US government last year as settlement for breaching the terms of an earlier deal on trade sanctions violations.
In order to rescind the ban, ZTE agreed to pay $1 billion in fines and put $400 million in escrow as a down payment against future violations. Further, the company also agreed to overhaul its board and executive team. For those who are unaware, the ban was imposed on ZTE for selling goods to Iran and North Korea, both of which were under U.S. Economic sanctions at the time.
Despite going through hard times, the company hasn’t given up on innovating. The company is working on two concept phones with a high screen-to-body ratio. While one uses a side sliding panel to house all cameras and sensors, the other uses a flap that juts out from the side of the phone to carry the selfie snapper. It is also working on a foldable smartphone.
According to the data released by Counterpoint Research, ZTE was the fourth most popular smartphone brand in the U.S. with an 11% market share in the first quarter of 2018. However, from the second quarter through the end of the year, ZTE fell out of the top five.
Going forward, the company is planning to ratchet up investments in 5G technology research and development, along with cybersecurity initiatives, to support the deployment of next-generation mobile networks around the world.
