Battered and bruised ZTE takes another 10% hit
Shares in ZTE have continued to tumble, with another 10% being wiped off share price on Friday, while the threat of a trade war lurks in the background.
Shares in ZTE have continued to tumble, with another 10% being wiped off share price on Friday, while the threat of a trade war lurks in the background.
A humbled and diminished ZTE has resumed trading after making extensive concessions to the US, but investors almost halved its market value.
Reports indicate Chinese kit vendor ZTE may be on the verge of getting its US export ban lifted after negotiations with the commerce department.
Senators are planning to derail President Trump’s plans to ease pressure on ZTE, potentially removing the ban on US exports, pointing out the law cannot be bent and ignored to satisfy political objectives.
US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He have reportedly laid the groundwork for a deal which would end escalating tensions between the two nations and save the fast falling ZTE.
The threat of extinction for ZTE was realistic as it seemed the US was gaining the upper hand in the apparent US/China trade war, but President Trump might prove to be an unlikely hero for ZTE.
ZTE employs 75,000 people and sold $17 billion of gear last year, but seems to have been wiped out with one stroke of a US regulatory pen. That’s scary.
The impact of the US denial order preventing ZTE from doing business with any US companies has been made brutally clear in a ZTE investor filing.
The Pentagon isn’t allowed to ban personnel from having ZTE and Huawei devices for personal use (not yet anyway) but it can stop retail outlets on US military bases around the world from stocking them.
Following the decision from the US government to activate the Suspended Denial Order, ZTE has hit back with the threat of a lawsuit, claiming the order not only threatens its own survival but that of its suppliers.
If ZTE has acted in violation of US trading regulations there is no question it should be punished, but investor reaction to the ZTE ban perhaps shows US companies depend more on China than vice-versa.
The US Department of Commerce’s Bureau of Industry and Security (BIS) has imposed a denial of export privileges order against ZTE, after coming to the conclusion it lied to the committee on numerous occasions.
Nokia, Ericsson and ZTE spent 2017 clearing the decks in advance of 5G. Meanwhile Huawei made more money than the rest of them added together.
The heads of six US intelligence agencies have reportedly told a Senate committee that even private citizens shouldn’t touch Chinese gear with a barge pole.
ZTE has stepped up to claim it has released the world’s first 5G E2E network slicing solution across 5G RAN, core network and bearer network.
ZTE has published guidance for its most recent quarter, with the poor-man’s Huawei showing Ericsson and Nokia you can make money if you try hard enough.
ZTE board members have approved the issuance of 686,836,019 A Shares in an effort to raise capital for 5G research and development.
The position of the US state towards Chinese telecoms companies seems to be hardening by the day.
There might have been some optimism from Huawei and ZTE that the US market was about to open up, but Congressman Mike Conaway is looking to kill that ambition off completely.
Lixin Cheng, the CEO of ZTE’s mobile device business, has said his company’s first 5G smartphone could make an appearance later this year.
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