Zoom Technologies (ZOOM)- Buzz Stock of the Day

Posted on Monday, September 14th, 2009

Shares of communication products maker, Zoom Technologies, Inc.(NASDAQ: ZOOM) were up as much as 140 percent in morning trading Monday from after the company announced second quarter financials for Gold Lion Holdings, a leading Chinese mobile phone manufacturer that Zoom acquired earlier this month.

For the second quarter of 2009, Gold Lion more than tripled its revenues to $53.1 million, compared to the same period last year. Furthermore, second quarter revenues were up 84 percent sequentially. The substantial revenue growth is due in large part to a significant order from one of Gold Lion’s existing customers.

“We are most pleased to report these outstanding quarterly results following the recently announced and shareholder approved transaction with Zoom Technologies,” said Lei Gu, Chairman and Chief Executive Officer of Gold Lion. “We believe these results reflect the burgeoning mobile telecommunications business in China and our ability to drive revenues and profit in this market.”

At a special meeting on September 8, shareholders of Zoom Technologies approved the acquisition of Gold Lion Holdings. The deal is expected to close by the end of September. Under the terms of the acquisition, Zoom shareholders will hold shares in two publicly traded companies, a vertically integrated China-based manufacturer of mobile telecommunication devices called Leimone United, Inc., and its US operating company Zoom Telephonics, which will retain substantially all of Zoom’s assets, liabilities, and current operations prior to the acquisition.

Revenues weren’t the only highlight in the Gold Lion’s second quarter results. The company reported a 147 percent increase in gross profit, and a $200,000 decline in operating expenses compared to the same period last year. Gross profit as a percentage of revenue, however dipped to 5.95 percent, from 10.95 percent in the same period a year ago, primarily because of low gross margins related to a significant order the company received during the quarter.

“These results further demonstrate the value of the transaction we expect to close in September,” said Zoom’s Chairman and CEO, Mr. Frank Manning. “The mobile phone market in China is growing rapidly, and we believe Gold Lion is well-positioned to benefit from this growth.”

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