China TechFaith -12.4% on Q1 sales drop, soft guidance

China TechFaith (CNTF -12.4%) expects Q2 revenue of $22M-$26M, down from Q1's $26.2M and the year-ago period's $30.2M.

The company states its Q1 sales (-7% Y/Y) were affected by an "ongoing strategic shift in [its] gaming business and the industry-wide impact of seasonality on the smartphone and branded phone markets." It expects "the situation to remain challenged" in Q2.

Gross margin fell to just 7.3% from 12.9% in Q4 and 16.1% a year ago. Opex was $6.3M, down from $8.8M a year ago but up from $4.2M in Q4.

Original developed product (ODP) sales rose 61% Y/Y to $23.4M, aided by a 260% Q/Q increase in "smart device" sales off a small base. Brand-name phone sales fell 74% Y/Y to $2.7M, and gaming revenue fell to just $117K from $3.4M.

Q1 results, PR

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