China Techfaith CEO: Nine New Contracts Comprise Lion's Share of Smart Phone Guidance (CNTF)

May.16.06 | About: China TechFaith (CNTF)

In response to a question from Brian White of Jeffries, China Techfaith Wireless (NASDAQ:CNTF) CEO Defu Dong indicates that more than two thirds of the company's revised guidance for smart phones originates from new contracts. From CNTF's conference call:

Brian White - Jefferies

Could you talk a little bit about the nine new smart phone contracts? First of all, are these all with different customers? How many of these customers are new customers for China TechFaith?

Defu Dong - Chief Executive Officer

Gilbert, I will answer this question. For the smart phone business, we have five contracts in China. Four are new customers, one is an older customer who is buying new technology. For Europe, we have two customers. One is a new customer, one is an older customer. For us, it is a new customer...

Brian White - Jefferies

Okay. And when we look at what type of customers these are, can you just give us a feel for what percent, or number of customers that are OEMs? What number are distributors? What number are operators? Just to give us a feel for the customer base.

Defu Dong

For China market, [five] are OEMs. Some are new licensing companies from the China government... In Europe, one is OEM, one is China.

Brian White - Jefferies

One is China, okay.

Defu Dong

The type of customer for Europe is operator.

Brian White - Jefferies

Is an operator. Okay. What do you think the revenue contribution would be? Is this what is going to make up the 25%, these nine contracts? Are there other contracts you have to win to hit that number, the 25% of ‘06 sales from smart phones?

Defu Dong

These nine contracts contributed 70% of the latest guidance, I think.

Brian White - Jefferies

70%?

Defu Dong

Yes.