Zoom Technologies Reports Record Fourth Quarter 2010 Revenue and Net Income

Zoom Technologies, Inc. (NASDAQ: ZOOM) a leading China-based manufacturer of mobile phones and other mobile electronic products, today reported financial results for the fourth quarter and full year ended December 31, 2010.

Mr. Lei Gu, Chairman and Chief Executive Officer of Zoom Technologies, commented, “We are once again extremely excited to report another record quarter of tremendous sequential and year-over-year revenue growth as well as dramatic full-year revenue growth. Our record fourth quarter results reflect both the overall robust mobile phone market in China as well as Zoom’s successful execution of its strategic plan to position itself as a major player in this growth market. China’s mobile phone user penetration rate continues to grow and we expect further expansion from the present 64% rate at the end of 2010. Our guidance for 2011 reinforces the confidence we feel in both the Chinese mobile market and Zoom’s ability to leverage our superior engineering team and extensive supply chain network.”

For the fourth quarter of 2010, Zoom generated net revenue of $86.6 million, up 67% over $51.8 million for the fourth quarter 2009; and up 20% sequentially from $72.2 million in the third quarter of 2010.

For the full year of 2010, Zoom reported revenue of $252.6 million, up 34% over $189.1 million for the full year 2009. The year over year revenue growth was primarily due to an increase in orders by our EMS customers and a tremendous increase in the sales of our Leimone brand phones.

Mr. Gu continued, “We believe that the migration to nation-wide 3G usage in China is inevitable. Consumers continue to demand more video data, mobile web access and always connected applications and we will continue to focus our design and engineering efforts to provide the best mobile handsets on the market.”

For the fourth quarter of 2010, Zoom reported net income of $5.1 million, up 169% over $1.9 million for the fourth quarter 2009; and up 34% sequentially from $3.8 million in the third quarter of 2010. The increase was mainly due to large EMS orders and increased sales of our Leimone brand phones which carry a higher profit margin. Net income for the full year ended December 31, 2010 was $12.8 million compared to net income of $6.2 million for the full year 2009.

Gross profit for the fourth quarter of 2010 was $12.5 million, up 380% from $2.6 million in the fourth quarter of 2009; up 91% sequentially from $6.5 million in the third quarter of 2010. Gross profit for the year 2010 was $27.7 million, up 143% from $11.4 million for 2009. Gross margin was 11% for 2010 up from 6% for 2009. Net margin was higher at 5% in 2010 as compared to 3% in 2009. The increase in gross margins reflects our strategy to win large orders in the competitive Chinese mobile manufacturing market, while our effective managerial control ensured profitability.

Mr. Gu continued, “We are proud of the growth we have achieved in 2010 and excited about taking advantage of the foreseeable growth in China’s mobile market and significantly increasing manufacturing capabilities going forward. In 2011, we expect to continue to fuel the rapidly expanding China mobile market by introducing 25 new models, including five 3G models, of our Leimone brand proprietary mobile phones. In addition, we continue to increase our manufacturing capacity and produce mobile products for top tier Chinese mobile phone companies.”

Looking ahead, Mr. Gu remarked, “For the first quarter ending March 31, 2011, we expect net revenue to be approximately $53.0 million and net income to be approximately $1.98 million. For the full year 2011, we maintain our previous guidance and expect net revenue to be between $320 and $340 million, and 2011 net income to be between$16 million to $17 million.”