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.
China TechFaith Wireless (CNTF -5.2%) shares sell off following the company's lukewarm Q3 report.
Management sees Q4 revenue of $28M-$32M (compared to 2012 Q4 revenue of $31M, which itself was a 6.2% Y/Y decline). Senior VP Jay Ji noted on the conference call that the company expects "intensive competition and price pressure to continue on all our business segments."
Shares of the Chinese small-cap have been volatile, reaching lows of $1.11 in Sept. before surging to as high $2.08 in Oct. and subsequently walking down again.
China TechFaith Wireless Comm Tech Ltd is a China-based original developed product provider focused on the original design and development of handsets and sales of finished products to its local and international customers.