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China Watch: Mixed Earnings Results of Major Chinese Corporations

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Baidu and ZTE also make the news.

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MINYANVILLE ORIGINAL This week, Microsoft's (NASDAQ:MSFT) Surface tablet launched in China at the same time as it did in the US and a few other countries. Microsoft hopes this simultaneous release will cut down on rampant piracy.

"The fact that there is no (release) delay and they are treating China as one of their primary markets reflects how important China is to Microsoft and I think that's evident in how they plan to launch Surface," Adam Leach, an analyst with technology consulting firm Ovum in London, told Reuters.

Meanwhile, earnings releases dominated the Chinese business landscape this week. Here are the highlights:

China Unicom (NYSE:CHU): China Unicom missed estimates with its third-quarter earnings report. Net income rose 27% to 2.02 billion yuan ($324 million) from 1.59 billion yuan a year ago. Analysts had projected net income of 2.21 billion yuan. Revenue, meanwhile, increased 16% to 63.5 billion yuan, compared to analysts' estimate of 63 billion yuan.

After losing exclusivity to the iPhone (NASDAQ:AAPL), China Unicom has ramped up spending to promote lower-end smartphones, whose subscribers typically use less data.

"It appears the miss was driven by higher selling, marketing," as well as administrative expenses, Lisa Soh, a analyst with Macquarie Group in Hong Kong, told Bloomberg.

China Mobile (NYSE:CHL): China Mobile's earnings for the first nine months of the year increased 1.4% to 93.31 billion yuan ($14.92 billion) from 91.98 billion yuan in the same period a year ago.

For the third quarter, the world's largest mobile carrier by subscribers posted earnings of 31.11 billion yuan, up 1.3% from a year ago, and beating the consensus estimate of $30.5 billion yuan. China Mobile has recorded single-digit profit growth in the past three years, thanks to its heavy handset subsidies.

"Even with iPhones, the bottomline will still be pressured because of the increasing rebates in mobile phones," Philip Mok, a Hong Kong-based analyst at Phillip Securities, told Reuters. "(The key risk) will be slower-than-expected growth in its 3G customer base."
The company didn't provide a figure for the third quarter, but based on its first-half net of 62.2 billion yuan, China Mobile's third-quarter figure was 31.11 billion yuan.

ZTE (SHE:000063): The world's fourth-largest mobile phone maker recorded a net loss of 1.945 billion yuan ($311.43 million) in the third quarter, the first time it has notched up a quarterly loss since it listed in Hong Kong in 2004. In the same quarter last year, the company had notched a net profit of 299.27 million yuan. Quarterly revenue declined 13% to 18.09 billion yuan from 20.83 billion yuan a year ago, with the global economic slowdown affecting demand for ZTE's telecommunications equipment.

Along with fellow Chinese telecommunications company, Huawei (SHE:002502), ZTE was accused by US lawmakers of posing a threat to national security. A report from a Congressional committee also suggested that ZTE has business ties with Iran, a country embargoed by the US. Because of the report's findings, Cisco Systems (NASDAQ:CSCO) has ended its seven-year strategic cooperation agreement.
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