Chapter 3

http://www.marketwatch.com/news/story/Qiao-Xing-Universal-Telephone-Inc/story.aspx?guid=%7B88C6EC20-1D23-4A82-8347-2B88F34DAF82%7D

Summery:

This is news basically about how the net profit of Xiao Qing Universal Telephone, Inc in China had dropped dramatically from the year 2007 to 2008. The net non-operating income for the company n 2007 was 11.9 million, compared to 524.0 million in the same period of 2007, represents a decrease of 512.1 million. Xiao Qing Universal Telephone Inc is the largest manufacturers and distributor company of telecommunication in China. It had a strong net comprised of more than 5000 retail stores throughout China, and the company also has a strong partnership with many major retailers in Europe, North America and Latin America.



Connections:

This news is one of the significant examples for Extraordinary item. Extraordinary item could be defined as a gain or loss that is unusual, infrequent and not caused primarily by a decision made by someone inside the company. No one ever thought that the Net Profit of the company would drop for more than 90% in just one year. It is unusual for this company is moving from a well processed organization to a company that is nearly bankrupted. The pace of dropping of the company is so fast that no one could believe it is happening. This is one of the reasons that it is infrequent. It could not be a decision made by someone inside the company because I don’t believe that the CEO or someone that hold professional financial managing skills could make a decision that made the company lost 90% of net profit in only one year. That is unbelievable.



Reflection:

I think the reason for the significant loss of net profit of Qiao Xing Universal Telephone Inc probably relates to the Economic Depression in America. As I mentioned before, Qiao Xing Universal Telephone Inc had a strong partnership with many retailers through out North America and Latin America. As the economy of America goes down, companies in foreign countries such as China also could go through a downfall period.