Cellphone wars push China's Ningbo Bird into red

China's biggest cellphone maker, Ningbo Bird, warned on Friday it had slipped into the red, joining rival TCL Communication in the loss column amid cut-throat competition in their home market. Bird's shares plunged their daily 10 percent limit by noon, leading all morning decliners.
"We expect to report a loss in the first half of the year," Ningbo Bird Co Ltd said in a filing to the stock exchange.
The company previously reported a 26.71 million yuan ($3.23 million) profit in the first quarter of this year, which means that it expects to report a loss of greater than that amount in the second quarter.
Bird reported a net profit of 111.34 million yuan in the first half of 2004.
It blamed the slide into the red on fierce competition that has caused margins to fall. It added that overall sales remained flat despite a surge in exports, reflecting the difficult situation it is facing in the domestic market.
China is the world's largest mobile market by subscribers, with about 350 million, and one of the largest for mobile phone sales, with about 100 million handsets sold last year, according to various sources.
But it has also become one of the world's most competitive markets in recent years, as a group of home-grown companies led by Bird and TCL rose to take about half of the market in 2003 from a dominant group of multinationals led by Nokia, Motorola and Samsung Electronics.
Those multinationals have fought back in the last year, particularly at the low end of the market that had become a stronghold of the domestic players.
As a result, the foreign companies clawed back market share, controlling about 60 percent of the market last year, according to Gartner.
Bird's fall into the red follows a similar drop by TCL Communication Technology Holdings Ltd, China's second biggest domestic player.
In addition to problems in China, TCL has also been burdened with the loss-making cellphone business it inherited from France's Alcatel through a joint venture the two sides formed last year. TCL bought out Alcatel from the venture earlier this year.
In April, TCL, a unit of Shenzhen-listed TCL Corp reported a loss of 386 million yuan for the first quarter of the year. Most of that came from the Alcatel assets, which posted a loss of 378 million yuan for the quarter.