Zoom Technologies Inc. (ZTNO)

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Zoom Technologies Reports Second Quarter 2010 Results

Date : 08/19/2010 @ 4:05PM
Source : MarketWire
Stock : Zoom Technologies (ZOOM)

http://ih.advfn.com/p.php?pid=nmona&article=44075901&symbol=ZOOM

Financial Highlights:

* Second quarter net income reached $2.03 million, up 20% year-over-year and up 7% sequentially
* Second quarter net margin increased to 4.7%
* Revenue for first six months increased 14.5% as compared to last year, despite impact of decreased second quarter pass-through revenue
* Net income for the first six months grew 50.0% over last year to $3.93 million
* LEIMONE brand phone sales reached 128,000 units

Guidance:

* Third Quarter 2010 net income between $2.7 and $3.3 million
* Third Quarter 2010 revenues between $55 and $61 million
* Reaffirms full year 2010 net income guidance of between $11.5 and $12.5 million
* Revises full year 2010 revenues guidance to between $210 and $230 million reflecting impact of pass-through revenue
* Expects to sell 600,000 LEIMONE units in 2010

Zoom Technologies, Inc. (NASDAQ: ZOOM), a leading China-based manufacturer of mobile phones and other mobile electronic products, reported financial results for the second quarter ended June 30, 2010.

Mr. Lei Gu, Chairman and Chief Executive Officer of Zoom Technologies, commented, "We continue to gain market share and increase presence with our 3G LEIMONE brand phones in China. We are thrilled to report six month year-over-year revenue growth and sequentially higher net income, and we are encouraged by the strong acceptance of our LEIMONE brand phone in China. The decrease in our second quarter revenue is solely a reflection of the strength in our consignment business which impacted the total revenue figure while leaving net income unaffected. During the second quarter, one of our major customers provided us components that are normally sourced by Zoom and would have been included in our revenue. This is not a sign of reduced business activity, since we actually increased our manufacturing volume and posted higher net income than the previous quarter. We believe that the increased production capacity, along with the strength of our EMS business, will contribute to improving our margins and further our revenue growth through the second half of 2010."

For the second quarter of 2010, Zoom reported net revenue of $42.9 million, as compared to $53.1 million for the second quarter 2009. The reduced revenue figure in the quarter was due to proportionally more "consignment manufacturing" where the customer provided the components and Zoom was not required to procure components, resulting in less pass-through revenues. As a result, gross and net margins this quarter increased to 10.7% and 4.7% respectively, as compared to 5.9% and 3.2% respectively for the year ago quarter. The increase in margins was also attributed to the sales of Zoom's proprietary LEIMONE brand phones which carry higher margins.

Manufacturing volumes increased sequentially in the second quarter of 2010. Zoom manufactured 1.7 million mobile phone printed circuit board assembly (PCBA) units and 1.0 million whole phones in the quarter, up 17% and 14% respectively over the first quarter 2010. Revenue from the sale of our higher margin LEIMONE brand phones in the second quarter was $4.5 million, or 10.4% of total revenue. During the quarter, Zoom sold 56,714 units of LEIMONE brand mobile phones of which 18% were 3G units. Zoom did not sell its own branded phones in the year ago period.

Gross profit for the second quarter of 2010 was $4.58 million, up 45% from $3.16 million for the same quarter in 2009, and up 10% sequentially from $4.18 million for the first quarter 2010.

Net income for the second quarter was $2.03 million, up 20% from $1.70 million for the same quarter last year, and up 7.3% from $1.90 million of the first quarter 2010. Earnings per share for the second quarter 2010 was $0.17 as compared to $0.86 per share in the same quarter last year when the operating entity was a private company in China.

For the first six months of 2010, Zoom reported net revenue of $93.86 million, up 14.5% over $81.95 million for the first six months of 2009. The year over year revenue growth was primarily due to an increase in orders from domestic EMS customers and an increase in sales of Zoom's proprietary LEIMONE phones.

Mr. Gu continued, "We continue to build traction as a leading consumer recognized brand. This leadership is reflected by the launch of our third 3G LEIMONE phone reflects Zoom's outstanding technology and continues to solidify our already strong relationship with China Telecom. Zoom believes it is well positioned to benefit from the outstanding growth expected in the design and production of advanced mobile phones for China's 3G network. With the successful launches of several LEIMONE models so far in 2010, the Company anticipates selling more than 600,000 LEIMONE units by the end of this year. We are confident that our mobile phones will appeal to China's burgeoning young customer base."

Looking ahead, Mr. Gu remarked, "We will continue to focus on our mobile manufacturing business in the second half of 2010, as the market opportunity in China is enormous. We are ready to take advantage of the foreseeable growth in China's mobile market. For the third quarter 2010, we expect net revenue to be between $55 million and $61 million and net income is expected to be in the range of $2.7 and $3.3 million. For the full year 2010, we maintain our net income guidance of $11.5 million to $12.5 million, and revise our net revenue to be between $210 and $230 million reflecting the impact of pass-through revenue."

Conference Call Details

The company will host an investor call at 4:30pm EDT (1:30pm Pacific). To access the conference call, dial 877-941-2069 and enter access code 4351698. Callers outside the U.S. and Canada should dial 480-629-9713 and enter access code 4351698.

A replay of the conference call will be available through Thursday, August 26, 2010. To access the replay, please dial 800-406-7325 and enter access code 4351698. Callers outside the U.S. and Canada should dial 303-590-3030 and enter access code 4351698.

About Zoom Technologies, Inc.

Zoom Technologies is a holding company with subsidiaries that engage in the manufacturing, research and development, and sale of electronic and telecommunication products for the latest generation mobile phones, wireless communication circuitry, and related software products. Zoom Technologies' subsidiary, Jiangsu Leimone, owns a majority stake of TCB Digital, which offers highly customized and high quality Electronic Manufacturing Service (EMS) for Original Equipment Manufacturer (OEM) customers as well as its own brand under the brand name of Leimone. The company's products are both exported and sold domestically. For more information about Zoom Technologies please visit Zoom's corporate website at http://www.zoomleimone.com.

Forward-Looking Statements

Certain statements in this press release may constitute "forward looking statements" that involve risks and uncertainties. These include statements about our expectations, plans, objectives, assumptions or future events. You should not place undue reliance on these forward-looking statements. Information concerning factors that could cause our actual results to differ materially from these forward-looking statements can be found in our periodic reports filed with the Securities and Exchange Commission. We undertake no obligation to publicly release revisions to these forward-looking statements to reflect future events or circumstances or reflect the occurrence of unanticipated events.

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Investor Contacts:

Cynthia Hiponia

The Blueshirt Group

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