You'd think that shareholders would be incensed about a company copping a fine large enough to wipe out seven quarters of net income.

Apparently not. Shares in ZTE Corp. climbed in early Hong Kong trading Wednesday, after the company agreed to pay the U.S. government $892 million for selling its wares to Iran. In the first 30 minutes, ZTE's H-shares rose as much as 8.9 percent, the most in more than 18 months, on volume that was more than 30 times the 20-day average. That jump boosted ZTE's market value by a figure equal to about 80 percent of the penalty's cost. Its Shenzhen stock was suspended.

Were it not for the fine, ZTE's net income to shareholders would have increased 19 percent last year, instead of the 2.4 billion yuan ($348 million) loss it reported in a statement Wednesday.

Vociferous mea culpas have struck a chord with investors who worried that the Chinese networking equipment and smartphone maker would suffer long-term consequences from breaking sanctions on selling U.S. technology to that nation's arch-rival.

Instead, ZTE's execution of a text-book study in contrition, reflection and reform has helped it build goodwill in America, where both itself, and Chinese rival Huawei Technologies Co., struggle to cast off a reputation -- deserved or not -- as being tools of the government's spying program. The current thinking in the U.S. is that since they're Chinese, the communications equipment they sell is likely laced with spyware, backdoors and other security vulnerabilities that can be exploited by Beijing.

ZTE's reformation has included replacing its founding chairman, creating a compliance committee and putting more than 45,000 staff though export-controls training. Critics may dismiss those moves as superficial, and the U.S. will be keeping an eye on compliance for the next seven years, yet appearances matter.

With global appetite for data continuing and next-generation 5G wireless networks to be rolled out in coming years, not capturing the U.S. market is a scenario ZTE doesn't want to entertain. Hence the pragmatic apologies and rush to rehabilitate.

Which leaves the final matter of paying that massive fine. Thankfully for ZTE, cutting such a check shouldn't be a problem, due to the $4 billion in cash and equivalents it had at the end of September, and a current ratio that's in line with regional peers. A sizable notes payable figure and other short-term borrowings -- equal to $3.75 billion at the end of September -- might necessitate further capital raising, however.

If ZTE decides that's warranted, such funding shouldn't be a stretch. But it may be the next hurdle for investors to keep an eye on.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Tim Culpan in Taipei at [email protected]

To contact the editor responsible for this story:
Katrina Nicholas at [email protected]