2009-11-23 22:08:03 -
BEIJING -- (Marketwire) -- 11/23/09 --
Revenue Beats Prior Guidance; Gross Margin Improves to 19.5%
Operating Profit Increases by 156.4% Compared with the Previous Quarter
Company Expects Continued Sequential Growth in the Fourth Quarter Led by
Robust Feature Phone, Smartphone and Wireless Data Card Sales
China Techfaith Wireless Communication Technology Limited (NASDAQ: CNTF) ("TechFaith" or the "Company") today announced its unaudited financial results for the third quarter ended September 30, 2009.
For the third quarter of 2009, TechFaith reported net revenues of US$52.8 million, a 5.9% increase compared to US$49.8 million in the previous quarter. This is above the high end of the Company's prior guidance for third quarter of 2009 revenues, which was in the range of US$47 million to US$52 million. Gross profit for the third quarter of 2009 was US$10.3 million, an 8.4% increase compared to US$9.5 million in the previous quarter. Gross margin for the third quarter of 2009 was 19.5% compared to 19.0% in the previous quarter.
Operating expense for the quarter was US$5.0 million, a 32.3% decrease compared to US$7.3 million in the previous quarter and a 55.7% decrease compared to US$11.2 million in the third quarter of 2008.
Operating income for the third quarter of 2009 was US$5.6 million, a 156.4% increase compared to US$2.2 million in the second quarter of 2009 and an even larger increase over US$0.28 million in the third quarter of 2008.
Net loss attributable to TechFaith for the third quarter of 2009 was US$3.4 million. This compares to net income of US$4.5 million attributable to Techfaith in the second quarter of 2009, and compares to net income of US$0.45 million in the third quarter of 2008. The net loss attributable to TechFaith for the third quarter of 2009 included a US$9.2 million non-cash charge as a result of change in fair value of the derivatives associated with a convertible debt.
Defu Dong, TechFaith's Chairman and CEO, said, "In the third quarter we achieved better than expected results due to our team's execution on opportunities in our core original developed product business. Revenue growth in our smartphone business was led by our high-end models, which carry a higher average selling price in the domestic China market. Feature phone sales increased significantly due to the increased sales of our high-end GSM phones and dual mode WCDMA plus GSM phones and the continued sales of our 3G data cards in China. In the international market, we made further progress in selling our high-end GSM phones into Latin America and South East Asia, selling our dual-mode phones into Europe, and selling our 3G phones and data cards into South East Asia. We continue to expect even better performance from our original developed product business moving forward based on anticipated longer-term growth in China's 3G market and certain international markets, combined with the recovery already underway in the global mobile phone market."
"We continue to make considerable progress in our branded phone strategy, under which we will launch tailored models into specific market segments using our subsidiary's brand or a relevant licensed brand name. In line with our strategy, we announced at the end of Q3 2009 that TechFaith would set up a new company to license well-known international brands for high-end, brand-name mobile phones that target fashion-conscious and high-end mobile phone users, teenagers and sports fans. TechFaith also expects to close its acquisition of QiGi by early 2010. This is an important transaction for us in our efforts to target enterprise users and operator tailored customers. We believe the branding business will lead to other business opportunities for TechFaith over the long term with higher gross margins."
"TechFaith continues to make significant progress in its mobile and PC online gaming business. We continue to develop our own proprietary content for both mobile and PC online gamers, while also working with third party developers. Our approach has led to some very encouraging initial achievements, from securing investment backing earlier this year to the recently announced agreement with several Chinese mobile phone companies to build in our games with the service fee payments for the mobile phone games. As a result, we expect our mobile phone gaming business to realize initial revenues in the fourth quarter this year."
Fourth Quarter 2009 Outlook
TechFaith currently expects revenues to be in the range of US$52 million to US$55 million for the fourth quarter of 2009, including incremental revenues from the Company's mobile gaming business. The Company is targeting initial profitability of its mobile gaming business in the fourth quarter of 2009. This forecast reflects TechFaith's current and preliminary view, which is subject to change.
Conference Call
TechFaith will hold a call on Monday, November 23, 2009 at 7:00 p.m. U.S.
Eastern Time (8:00 a.m. November 24, 2009 in Beijing), with dial in phone number +1-617-213-3523 and conference call passcode 97135492. A live webcast of the conference call will also be available on TechFaith's website at www.techfaithwireless.com :
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A replay of the call will be available approximately one hour after the conclusion of the live call through 12:00 p.m. on November 30, 2009, U.S.
Eastern Time (1:00 a.m. December 1, 2009 in Beijing) by telephone at +1-617-801-6888. To access the replay, use passcode 76917985. A webcast replay will also be available at www.techfaithwireless.com :
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About TechFaith
TechFaith (NASDAQ: CNTF) is a China-based original developed product provider focused on the original design and sales of mobile phone products.
TechFaith is also striving to build a leading PC and online gaming business through its wholly-owned subsidiary, 798 Entertainment Limited. 798 Entertainment Limited currently engages in providing self-developed as well as co-developed and licensed cell phone contents.
TechFaith engages in the development and production of middle to high end
handsets and tailor made handsets. TechFaith's original developed products
include: (1) multimedia phones and dual mode dual card handsets of multiple
wireless technology combination such as GSM/GSM, GSM/CDMA, GSM/WCDMA,
GSM/TD-SCDMA and UMTS/CDMA; (2) Windows-based smartphones and Pocket PC
phones; and (3) handsets with interactive online gaming and professional
game terminals with phone functionality.
With the capability of developing Middleware Application MMI/UI software on
2G/2.5G(GSM/GPRS, CDMA1X), 3G(EV-DO, WCDMA/UMTS, TD-SCDMA) and 3.5G(HSDPA)
communication technologies, TechFaith is able to provide Middleware
Application MMI/UI software packages that fulfill the specifications of
handset brand owners and carriers in the global market. For more
information, please visit www.techfaithwireless.com : .
TechFaith is targeting both the mobile and online PC gaming markets through
its websites www.798uu.com : and www.798game.com : with gaming content
developed internally, co-developed and licensed from third parties.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates,"
"future," "intends," "plans," "believes," "estimates," "confident,"
"outlook" and similar statements. Among other things, the business outlook and strategic and operational plans of TechFaith and management quotations contain forward-looking statements. TechFaith may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on Forms 20-F and 6-K, etc., in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties.
Statements that are not historical facts, including statements about TechFaith's beliefs and expectations, are forward-looking statements.
Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, those risks outlined in TechFaith's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. TechFaith does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
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CONTACTS:
In China:
Jay Ji
China Techfaith Wireless Communication Technology Limited
Tel: 86-10-5822-8390
ir@techfaith.cn :
In the U.S.:
David Pasquale
Global IR Partners
Tel: +1 914-337-8801
cntf@globalirpartners.com :
