Zoom Technologies Reports Second Quarter 2012 Results

Second Quarter 2012 Highlights:
  • Revenue increased 71.3% over same quarter last year to $98.6 million from $57.6 million
  • Net income was $0.4 million compared to net income in same quarter last year of $1.5 million and net income of $0.6 million from the first quarter of 2012.
  • Net income in Q2 2012 was lower compared to the same quarter last year because of increased general and administrative expenses contributed by Portables and the increase in non-cash based equity compensation issued for new business initiatives and key employee retention.
  • In Q2 2012 we sold 3,094,000 whole phones with 823,000 units being Leimone brand phones; 173,000 of the Leimone phones were 3G handsets. In Q2 of 2011 we sold 890,000 whole phones with 207,000 units being Leimone brand phones; 158,000 units of Leimone phones were 3G handsets.
  • Sales of our own brand products in Q2 2012 represented $36.0 million or 36.5% of revenues compared to $13.6 million or 23.6% of revenues a year ago.

BEIJING, Aug. 20, 2012 (GLOBE NEWSWIRE) -- Zoom Technologies, Inc. (Nasdaq:ZOOM), a leading designer and manufacturer of mobile phones and consumer electronics, today announced financial results for the second quarter ended June 30, 2012.

For the second quarter of 2012, ZOOM generated net revenues of $98.6 million up 71.3% over $57.6 million for the second quarter 2011. The first half of the year is traditionally the slower period within the seasonality of our business. The increase in revenues in Q2 of 2012 as compared to the same period in 2011 was mainly due to increased emphasis by our sales team on selling whole handsets, especially our own brand Leimone products.  The second quarter revenues were up $7.7 million, or 8.5% from $90.9 million in the first quarter of 2012. Sales of Leimone phones contributed $36.0 million, or 36.5% of our Q2 2012 revenues. We also derived $11.7 million or 11.9% of our revenues from Portables Unlimited LLC.

Mr. Lei Gu, Chairman & CEO of ZOOM, provided the following insight. "Our growth in sales revenue reflects the execution of our plan to sell more whole phones, with particular emphasis on our branded products. As we continue to grow our sales, we will continue to expand our gross profit. We believe that our increased revenues are reflective of customers' increased receptivity of our comprehensive ODM (original design and manufacturing) solutions, and our increased brand recognition." Chairman Gu also pointed out that our increased revenues are indicative of our staying power not only as a manufacturer, but as a recognizable brand.

For the second quarter of 2012, ZOOM reported a net income of $0.4 million compared to $1.5 million in the same period in 2011. Net income for the first quarter of 2012 was $0.6 million. Net income in the second quarter of 2012 as compared to the same quarter in 2011 was down $1.1 million. Our decreased net income in 2012 relative to the same quarter in 2011 is indicative of a highly competitive market where gross margins have become very slim. The second quarter net income for 2012 as compared to first quarter income was down $0.2 million. The slight decrease is reflective of our increased general and administrative costs and non-cash based equity compensation. We expect to continue to grow our top line revenue by increasing our sales volume. In conjunction with our increased revenues, we expect per unit costs to decrease as we strengthen our bargaining power with our suppliers. We also expect that we will experience more economies of scale relative to our general and administrative expenses as we grow our revenue in future quarters.

Gross profit for the second quarter of 2012 of $8.3 million increased significantly compared to $5.9 million in the second quarter of 2011. Gross profit as percentage of revenue for the first quarter of 2012 was 8.4% as compared to 10.2% for the same quarter a year ago. Net margin was reduced to 0.4% in the second quarter of 2012 from 2.6% in the same quarter last year. Again, our decrease in gross and net profit margins are related to the highly competitive market; however, we expect these margins to improve as our increased production volumes will strengthen our bargaining power with our suppliers and we look forward to capturing more profitable ODM business in the coming quarters.

Looking ahead, Chairman Gu remarked, "As seen in our second quarter performance of 2012, we have begun executing the shift in our business from the traditional assembly-focused manufacturing for our OEM customers to delivering whole phone solutions on ODM basis. We will remain diligent in developing our ZOOM and Leimone brand products, as well as securing ourselves as a prominent ODM manufacturer in China."

Conference Call Details

The Company will host an investor call at 8:00 p.m. ET (5:00 p.m. PT) on Monday, August 20, 2012. To access the conference call dial +1-855-500-8701 and then enter access code (conference ID) 22041726. Callers outside the U.S. and Canada should dial +65-6723-9385 and then enter access code 22041726.

A replay of the conference call will be available through August 23, 2012. To access the replay, please dial +1-866-214-5335 and enter access code 22041726. Callers outside the U.S. and Canada should dial +61-2-8235-5000 and enter access code 22041726.

About Zoom Technologies, Inc.

Zoom Technologies is a holding Company with subsidiaries that engage in the manufacturing, research and development, and sale of electronic and telecommunication products for the latest generation of mobile phones, wireless communication circuitry and related software products. Zoom Technologies' subsidiary, Jiangsu Leimone, owns a majority stake of TCB Digital, which offers highly customized and high quality Electronic Manufacturing Service (EMS) for Original Equipment Manufacturer (OEM) customers as well as its Own Brand Manufacturing (OBM) under the ZOOM, LEIMONE and LONGTEL brand names. The Company's products are both exported globally and sold domestically in People's Republic of China.

The Zoom Technologies, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=9665

Forward-Looking Statements

Certain statements in this press release may constitute "forward looking statements" that involve risks and uncertainties. These include statements about our expectations, plans, objectives, assumptions or future events in which the outcome cannot be assured. You should not place undue reliance on these forward-looking statements. Information concerning factors that could cause our actual results to differ materially from these forward-looking statements can be found in our periodic reports filed with the Securities and Exchange Commission. We undertake no obligation to publicly release revisions to these forward-looking statements to reflect future events or circumstances or reflect the occurrence of unanticipated events.
CONTACT: Investor Contact:         Lynn Wei         Investor Relations Coordinator         Zoom Technologies, Inc.         +86-10-5935-9576         weilin@zoom.com         www.zoom.com

Zoom Technologies, Inc. Logo