China's ZTE Gets New Chairman Report
Chinese equipment maker ZTE is reported to have named Yin Yimin its new chairman just days after it said it would plead guilty to charges that it broke US export rules and pay an $892 million fine as a penalty. (See ZTE to Pay $892M Fine to Settle US Trade Dispute.)
The immediate appointment of Yin Yimin, previously chairman of controlling ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) shareholder ZTE Holdings, came swiftly after Zhao Xianming said he would resign as ZTE's chairman but continue in the roles of executive director and president, according to a Reuters report.
Formerly ZTE's chief technology officer, Zhao took charge of ZTE last April, replacing Shi Lirong in the leadership roles, after US authorities accused the Chinese vendor of selling products in Iran that included components made in the US. (See ZTE CEO to Quit in US Export-Ban Dispute.)
Since then, ZTE claims to have taken a number of steps to make its organization and business dealings more transparent, appointing a US lawyer as head of compliance and investing in new systems.
Zhao's decision to quit as chairman looks similarly aimed at burnishing ZTE's corporate image following the costly run-in with US authorities.
In a statement filed with the Shenzhen stock exchange, ZTE is reported to have said that Zhao resigned "in order to improve the company's management by differentiating the role of chairman and president."
According to Reuters, Yin has been chairman of ZTE Holdings since 2015 and was employed as ZTE's president between 2004 and 2010.
In a preliminary earnings statement published last week, ZTE said that provision for the $892 million fine had wiped out profits for the 2016 fiscal year. Having reported a net profit of about 3.2 billion Chinese yuan ($460 million) for 2015, ZTE expects to record a net loss of approximately RMB2.36 billion ($340 million) for 2016. (See ZTE Suffers $340M Net Loss on US Fine.)
Sales, meanwhile, are expected to edge up just 1%, to RMB101.23 billion ($14.64 billion), thanks to a "slight increase" in sales at the carrier networks and consumer businesses.
That level of growth looks disappointing by comparison with ZTE's bigger Chinese rival Huawei Technologies Co. Ltd. , which earlier this year said its revenues were likely to have risen by 32% for 2016. (See Huawei's Network Sales Up Around 32% in 2016.)
Western rivals Ericsson AB (Nasdaq: ERIC) and Nokia Corp. (NYSE: NOK) are faring much worse, however, both reporting sales declines of around 10% for 2016. (See Loss-Making Ericsson Still Short on Vision and Nokia Upbeat on Turnaround Despite Sales Decline.)
Iain Morris, , News Editor, Light Reading