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China TechFaith Wireless Communication Technology: Techfaith Reports Second Quarter 2015 Financial Results

The following excerpt is from the company's SEC filing.

Beijing, China, September 24, 2015 -

China TechFaith Wireless Communication Technology Limited (NASDAQ: CNTF) (TechFaith or the Company) today announced its unaudited financial results for the second quarter ended June 30, 2015.

For the second quarter of 2015, TechFaith reported total net revenues of US$23.6 million compared to US$24.7 million in the first quarter of 2015 and US$23.7 million in the second quarter of 2014. Gross profit for the second quarter of 2015 was US$2.8 million compared to US$2.2 million in the first quarter of 2015 and US$2.4 million in the second quarter of 2014. Gross margin for the second quarter of 2015 was 11.9% compared to 9.0% in the first quarter of 2015 and 10.1% in the second quarter of 2014, which reflects an increase in rental income during the second quarter of 2015.

Net loss attributed to TechFaith for the second quarter of 2015 was US$1.8 million or US$0.03 per basic and diluted weighted average outstanding American Depositary Share (ADS), compared to a net loss of US$3.1 million or US$0.06 per basic and diluted weighted average outstanding ADS in the first quarter of 2015 and a net loss of US$2.1 million or US$0.04 per basic and diluted weighted average outstanding ADS in the second quarter of 2014.

Ms. Ouyang Yuping, TechFaiths Chief Financial Officer, said, The second quarter of 2015 developed as expected with revenues coming in line with our guidance. Our gross margin improved to 11.9% in the second quarter of 2015 from 9.0% in the first quarter of 2015, as we achieved a 75% increase in our rental income over the same period, which rose from US$0.8 million to US$1.3 million. We continue to evaluate resources and programs as we work to better align our cost structure to our lower revenue base and to support the increased significance of our real estate business. As a result, we further reduced our operating expenses to US$4.3 million in the second quarter of 2015 compared to US$5.2 million in the first quarter of 2015. We remain on schedule with the expansion of our real estate business, with the second quarter of 2015 marking another major milestone in our progress. We invested US$139.1 million as part of a planned expansion of our real estate portfolio, which had the impact of reducing our balance of cash and cash equivalents to US$16.5 million at the end of the second quarter of 2015. We continue to have both sufficient resources and flexibility to meet our operating and working capital needs. Importantly, we expect to strengthen our balance sheet over the coming quarters as we start to secure a return on our real estate investments through the sale or lease of all available and unoccupied space.

Mr. Deyou Dong, Chief Executive Officer of TechFaith, said, Our overall assessment of the mobile sector remains unchanged from earlier in the year, with growth expected to face significant challenges for the foreseeable future due to shorter product lifecycles, high levels of competition and continued cost pressure. We are starting to evaluate strategic options around our mobile business, which may or may not ultimately result in the sale of our mobile business. We continue to focus on our growing real estate portfolio and expect this to be a major catalyst to unlock value for our Company and shareholders going forward. As we have completed most of the construction associated with our 16 buildings in Beijing, in addition to our two already completed buildings in Shenyang, our focus is on finishing the final construction phase of our technology parks in Beijing and attracting suitable tenants or buyers to lease or purchase all available and unused space.

Third Quarter of 2015 Outlook

TechFaith currently expects its total net revenues for the third quarter of 2015 to be in the range of US$4.5 million to US$8.0 million. The decline in expected total net revenues for the third quarter 2015 as compared to the second quarter of 2015 reflects...


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