ZTE shares slumps to one-month low after profit warning

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That would mean ZTE will report its first-ever quarterly loss when it officially announces its nine-month results later in October.

Changes in Chinese telecom carriers' equipment procurement and spending have cut sales, ZTE management told analysts late on Sunday.

The outlook for ZTE has already been clouded by a U.S. Congress committee report released last week that urged American companies to stop doing business with the company and its cross-town rival Huawei Technologies Co Ltd HWT.UL.

Shares in ZTE dropped as much as 17 percent to HK$10.42 in early trade, the lowest since September 19 and lagging a flat performance in the benchmark Hang Seng Index .HSI.

ZTE said its earnings had also partly been hurt after it curtailed sales to Iran early this year because of global sanctions.

The expected loss in the first nine months comes despite a gain of 370 million yuan from the disposal of ZTE Special Equipment Co Ltd, though ZTE's management told analysts that it expected to turn profitable for the full year.

Adding to ZTE's woes, the U.S. congressional report warned that China could use equipment made by ZTE and Huawei Technologies to spy on certain communications and threaten vital systems through computerized links.

Both companies have denied the allegations.

In August, ZTE posted an 85 percent drop in quarterly profit as its margins were squeezed by sluggish equipment sales and fierce competition in handsets.

(Reporting by Lee Chyen Yee; Editing by Anne Marie Roantree and Ryan Woo)

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