Cogo 2Q profit rises 27 pct despite tough market

Mobile phone designer Cogo Group Inc. posted a 27 percent increase in second-quarter profit Wednesday, matching analyst estimates despite weakening demand in its home market of China.

Cogo, based in Shenzhen, China, earned $6.5 million, or 16 cents, per share, in the three months ended in June. That compared with net income of $5.1 million, or 13 cents per share, at the same time last year.

Excluding costs unrelated to its ongoing business, Cogo said it earned 21 cents per share. That figure mirrored the average estimate among analysts polled by Thomson Financial.

Revenue rose 35 percent to $68.2 million, slightly better than analysts predicted.

Cogo Chief Executive Jeffrey Kang described the second-quarter business conditions as the worst that the company has faced in years. He blamed the troubles on China's tightening monetary policy and a devastating earthquake in the Sichuan province that killed thousands of people while leaving millions of others homeless.

Despite the challenges, Cogo maintained an optimistic outlook for the rest of the year.

"Management does not view the current weakness in China as a significant issue, but an opportunity for Cogo to consolidate and enhance its position in the industry to pave the way for long term growth," Kang said.

Cogo predicted it will earn 14 cents share, excluding special items, on revenue of $70 million to $74 million in the third quarter. Analysts, on average, had forecast earnings of 17 cents per share on revenue of $73.7 million, according to Thomson Financial.

The company's shares gained 31 cents, or 6.4 percent, in extended trading after finishing the regular session at $4.84, down 25 cents.