~ Auto Buzz ~: ZTE’s Value Falls By $3B As Trading Resumes Following US Row

Thursday, 14 June 2018

ZTE’s Value Falls By $3B As Trading Resumes Following US Row

ZTE saw some $3 billion of its value erased early Wednesday morning in China as its shares resumed trading on the Shenzhen Stock Exchange and its Hong Kong-based counterpart. The 41-percent drop left it valued at just over $74 billion and while a recovery isn’t out of the realm of possibility, it isn’t likely to arrive in the short term, with ZTE only now facing the real aftermath of its violations of U.S. trade sanctions imposed on North Korea and Iran, as well as its failure to comply with a subsequent 2017 settlement meant to get it out of the hot water with stateside regulators.

ZTE’s shares were suspended from both stock exchanges two months back after the U.S. Commerce Department hit the company with a seven-year denial order preventing it from obtaining crucial American technologies such as chips and software, whereas their return saw them drop from HK$25.60 ($3.26) to HK$14.96 ($1.91) earlier today. In a Wednesday filing with the Hong Kong Stock Exchange, ZTE confirmed the details of its second settlement with Washington, including a $1 billion penalty that may rise by another $400 million in case of any future violations. The vast majority of the firm’s management team is now also out of the door, with its board of directors undergoing changes as well. The Commerce Department insisted on independent auditors being appointed and financed by ZTE in order to ensure the company isn’t violating any trade embargoes going forward.

ZTE Chairman Yin Yimin recently referred to the U.S. episode as “disastrous” for the manufacturer’s prospects, having apologized for the ordeal and the uncertainty it brought. Recent reports estimate ZTE may lose as much as $3.1 billion due to its two-month absence from the market, a figure that’s directly attributable to its fines and missed sales, though the firm is now also facing the challenge of repairing its reputation, with its hampered image being likely to affect its near-term contracts as well. In the meantime, the U.S. Congress appears to be exploring the idea of reinstating the Commerce Department’s ban, with President Trump’s lifeline deal currently facing bipartisan opposition from stateside legislators.

The post ZTE’s Value Falls By $3B As Trading Resumes Following US Row appeared first on AndroidHeadlines.com |.

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