Coolpad warns of HK$2.05b first-half loss
Smartphone maker blames increased competition and reduced share of joint venture with Qihoo
Coolpad Group, the Chinese smartphone maker, has warned that it is expecting a first-half loss of HK$2.05 billion as a result of increased competition in the mainland and changes to a joint venture.
In a Hong Kong Stock Exchange filing, the company estimated sales had dropped 40 per cent compared with the same period last year, and 10 per cent in the six months to the end of December.
It also admitted that a business restructuring and the development of an open retail channel had not had any major effect on improving sales.
The company reported an HK$2.84 billion profit for the first six months of last year to June.
But its fortunes have declined rapidly after being ranked mainland China’s fifth-largest smartphone supplier in 2014, according to technology research firm IDC.
IDC has said the Chinese smartphone market is now well past its peak in terms of new sales, with year-on-year shipment growth falling to 2.5 per cent in 2015, down from 62.5 per cent in 2013, which it says is forcing many Chinese smartphone brands to look overseas for new business.
Domestic smartphone makers Oppo and Vivo pushed Lenovo and Xiaomi out of the top five vendor list in the first half of 2016, according to IDC’s latest figures.
Coolpad said HK$1.89 billion of its expected half-year loss is the result of a halving in its share of a joint venture with Chinese internet security firm Qihoo 360, from 50.5 per cent to 25 per cent.
Qihoo and Coolpad agreed the venture in 2014, creating a smartphone brand called Qiku based on Coolpad’s hardware manufacturing knowledge and its plans for online retailing.
Qihoo ploughed US$409 million into the business, however the deal reportedly turned sour when LeTV (now known as LeEco), another major mainland Chinese smartphone maker, invested in Coolpad.
Last year, LeEco took an 18 per cent stake in Coolpad for US$352 million.