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ZTE May Swing to First-Quarter Profit After Estimated 2012 Loss

ZTE Corp. (000063), China’s second-biggest mobile-phone equipment maker, said it may swing to a profit in the first quarter after posting an estimated loss last year.

The company plans to control costs, streamline its organization and focus its efforts in developed markets such as the U.S., Europe and Japan, ZTE said in a statement to the Hong Kong Stock Exchange today, without giving a target for net income in the first three months of 2013. ZTE intends to grab as much as 10 percent of the U.S. handset market by 2015, Cheng Lixin, head of ZTE’s operations, said in a Jan. 10 interview.

“The smartphone industry will continue to blossom and there is huge room for growth in the enterprise networking market,” ZTE said in the statement.

The company estimated a net loss of between 2.5 billion yuan and 2.9 billion yuan ($402 million-$466 million) in 2012, citing delays in domestic and international network projects and a drop in revenue for terminal products. That compares with net income of 2.06 billion yuan in 2011. ZTE, which posted a third- quarter loss of 1.9 billion yuan, is scheduled to report fourth- quarter and full-year earnings on March 28.

ZTE’s Hong Kong-listed stock tumbled 39 percent over the past year, compared with a 20 percent gain for the city’s Hang Seng Index. The Shenzhen-traded shares have fallen 39 percent.

To contact Bloomberg News staff for this story: Jing Jin in Shanghai at jjin32@bloomberg.net

To contact the editor responsible for this story: Gregory Turk at gturk2@bloomberg.net

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