Qiao Xing Universal Telephone, Inc. Announces 2008 Second Quarter Financial Results
September 26 2008 - 4:00PM
PR Newswire (US)
HUIZHOU, Guangdong, China, Sept. 26 /Xinhua-PRNewswire-FirstCall/
-- Qiao Xing Universal Telephone, Inc. (NASDAQ:XING) today
announces its un-audited second quarter operating results for the
three months ended June 30, 2008. The Company is only reporting its
second quarter operating results because a third party valuation is
currently being conducted for the purposes of accounting for the
$70 million convertible notes issued by our major subsidiary, Qiao
Xing Mobile Communication Co., Ltd. ("Qiao Xing Mobile")
(NYSE:QXM), on May 15, 2008. Within the announcement made by Qiao
Xing Mobile dated on September 12, 2008, the second quarter
operating result of QXM represented a big decrease from the
corresponding period of 2007, which lead to a drop of operating
result in XING also. Mr. Wu Rui Lin, Chairman of XING, commented,
"The performances of both XING and QXM were negatively impacted by
the recession of the macro-economic environment. With the
earthquake in Sichuan Province ("the Earthquake") and the increase
of Consumption Price Index ("CPI"), the consumption in Chinese
consumer market was slowed down. However, a delay in the release of
new product, VEVA S60, by CEC Telecom Company, Limited ("CECT"), a
subsidiary of QXM, also contributed to the decline in sales in the
second quarter. " "VEVA S60 was test-launched in May and production
was ramped up in June. Given the success that we are having with
VEVA S60 and the planned launch of more VEVA-series models, we are
optimistic that the operating results in the second -half of 2008
would be better. "Despite the significant decline in sales of
mobile phone due to the Earthquake and the increase of CPI, we saw
an over 50% increase in our indoor phone sales revenue due to the
increase of sales to overseas" Second Quarter 2008 Operating
Results Revenue was RMB509.4 million (USD74.3 million) in the
second quarter of 2008, compared to RMB 1,001.1 million for the
same period of 2007. The sales revenue was primarily contributed by
our major subsidiary CECT, which is in the mobile phone handset
business with its 'CECT' brand and 'VEVA' brand. For CECT, in the
second quarter of 2008, handset shipments were approximately
566,000 units, representing a decrease of 46.4% compared to
1,055,000 units in the second quarter of 2007. The decrease in
CECT-branded handset shipments in the second quarter of 2008 was
primarily due to lower demand caused by the earthquake in Sichuan
province in May and a delay in new product launch. In addition,
shipments in the second quarter of 2007 were significantly higher
due to the shipment of about 610,000 units of C1000, part of which
was used to clear the backlog of orders that were placed in the
first quarter of 2007. Gross profit decreased RMB163.5 million from
RMB312.2 million for the second quarter of 2007 to RMB148.7 million
for the second quarter of 2008. The decrease was mainly
attributable to the decrease of the sale of CECT-branded mobile
phone handsets. Selling, general and administrative expenses
("SG&A") were RMB78.5 million (US$11.4 million) in the second
quarter of 2008, which was an increase from RMB75.2 million in the
second quarter of 2007. The increase in SG&A expenses in the
second quarter of 2008 was primarily due to airtime costs incurred
on the sale of the C6000, W100, C3100, T150 and VEVA S60 models
through the infomercial arrangement. Airtime costs were RMB31.6
million in the second quarter of 2008, compared to RMB13.0 million
in the second quarter of 2007. Income from operations amounted to
RMB 70.2 million (USD 10.2 million) for the second quarter of 2008
compared to RMB 237.0 for the same period of 2007. Outlook Our
subsidiary, CECT has launched VEVA brand handsets, VEVA S60, and
has achieved great success to-date. VEVA S60's retail price
currently stands at RMB1,980 (US$289) and its gross margin is
approximately 61%. Nearly 100,000 units were shipped in the second
quarter of 2008 and we are targeting to sell another 300,000 units
in the coming quarter. The success of VEVA S60 has greatly enhanced
our confidence of building a high-end luxury mobile handset brand
in China. To this end, we are planning to set up specialty retail
stores in up-market shopping malls in China to serve as a direct
channel for the distribution of our VEVA brand handsets. We believe
that this will enhance the shopping experience of our customers and
help position VEVA as a luxury brand. We have also hired Mr.
Sangwoon Kang, who has 20 years of experience in the marketing
division of LG Electronics ("LGE") and formerly the director of
brand communication for LGE in China, to help roll out our plans
for VEVA. In terms of product pipeline, CECT have lined up a number
of handset models for VEVA brand, including VEVA S70, S80, S90 and
V6. VEVA S70 will be launched later this month at a retail price of
RMB2,980. VEVA S80, S90, and V6, which will feature new luxury
designs and enhanced user interface, are expected to be released in
the fourth quarter of 2008. Besides our plans for VEVA, we also
plan to enter the CDMA market through the launch of two CDMA models
later this year. We have established strategic cooperation with a
Taiwan-listed company, VIA Technologies, Inc. ("VIA"), to supply
CECT with the necessary CDMA chipsets. In addition, CECT and VIA
will also work together towards the bundling of the CDMA mobile
phones with China Telecom. For our COSUN-branded mobile phone
business, allowing for the significant decrease in the first half
year of 2008, we think the whole year growth rate will be adjusted
from 40% to around 15%. Our indoor phone business is expected to
increase significantly compared to 2007. About Qiao Xing Universal
Telephone, Inc. Qiao Xing Universal Telephone, Inc. is one of
China's largest manufacturers and distributors of
telecommunications products in China. QXUT's product portfolio
includes telecommunications terminals and related products,
including fixed wireless phones, VoIP telephones, mobile handsets,
PDAs and consumer electronic products, including MP3 players, cash
registers and set- top-box products. The Company primarily conducts
its business through its operating subsidiaries CEC Telecom Co.,
Ltd (CECT), and Huizhou Qiao Xing Communication Industry Co., Ltd
(HZQXCI), a company engaged in R&D and distribution of indoor
telephone sets and economy mobile phones under the COSUN brand. The
Company Group has built a strong distribution network comprised of
more than 5,000 retail stores throughout China and has established
partnerships with major retailers in Europe, North America and
Latin America, including Bellsouth and Wal-Mart. For more details,
please visit http://www.cosun-xing.com/ . Safe Harbor Statement
This announcement contains forward-looking statements, as defined
in the safe harbor provisions of the U.S. Private Securities
Litigation Reform Act of 1995. In some cases, these forward-looking
statements can be identified by words or phrases such as "aim,"
"anticipate," "believe," "continue," "estimate," "expect,"
"intend," "is /are likely to," "may," "plan," "potential," "will"
or other similar expressions. Statements that are not historical
facts, including statements about Qiao Xing Universal's beliefs and
expectations, are forward-looking statements. Forward-looking
statements involve inherent risks and uncertainties. A number of
factors could cause actual results to differ materially from those
contained in any forward- looking statement. Information regarding
these factors is included in our filings with the Securities and
Exchange Commission. Qiao Xing Universal does not undertake any
obligation to update any forward-looking statement, except as
required under applicable law. All information provided in this
press release is as of August 26, 2008, and Qiao Xing Universal
undertakes no duty to update such information, except as required
under applicable law. For more information, please contact: Rick
Xiao Qiao Xing Universal Telephone, Inc. Tel: +86-752-282-0268
Email: DATASOURCE: Qiao Xing Universal Telephone, Inc. CONTACT:
Rick Xiao of Qiao Xing Universal Telephone, Inc., +86-752-282-
0268, or Web site: http://www.cosun-xing.com/
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