ZTE is delaying the publication of its consolidated financial report for the first quarter of the year following new sanctions placed on the company by the United States government earlier this week, the firm said today. The tech giant's earnings release was initially scheduled for tomorrow but its section dealing with forecasts is now likely to be significantly revamped before its publication given the high degree of uncertainty surrounding its business following the latest decision from the U.S. Department of Commerce.
The federal government opted to block American companies from supplying any kind of hardware or software to ZTE over the next seven years due to the Chinese firm's failure to comply with the terms of the 2017 settlement that saw it plead guilty to conspiring to violate U.S. trade sanctions on Iran. ZTE's American suppliers including Qualcomm and Google are presently seeking clarification from the government in regards to how the Commerce Department's order will affect their business. Taken at face value, the order would prevent Google from licensing its Android operating system to ZTE, effectively killing its smartphone ambitions until 2025, at least in the United States, though most likely globally as well. While the firm is expected to push for a reprieve while it appeals the ruling, its chances of navigating the current ordeal unscathed in the medium term are slim, some industry watchers believe.
State-owned ZTE is publicly listed on stock exchanges in Hong Kong and Shenzhen but requested the trading of its shares suspended on Tuesday following the Commerce Department's decision. Besides an $890 million fine, ZTE's 2017 settlement included a provision that saw the firm agree to lay off four of its senior executives and discipline 35 others by withholding their bonuses or through other means. While the four firings have been carried out, no disciplinary action has been taken against the rest of the employees in question for unknown reasons. ZTE is presently estimated to be the world's seventh largest smartphone vendor, according to several industry trackers. The 2017 fine already provided a major blow to its global operations, with ZTE saying in February it hopes to soon return to profit following that setback.