Research firm IDC cuts its growth forecast from 5.7% and predicts a steeper decline in iPhone sales than originally expected.
Lenovo CEO Yang Yuanqing said integration efforts related to the company's past acquisitions "did not meet expectations."
The company suffered its first quarterly revenue decline in 13 years as its flagship smartphone appears to be nearing saturation point.
The Taiwanese firm uses Sharp screens in the iPhones it manufactures, and the deal could increase its leverage with Apple.
Commerce said ZTE had planned to use shell companies 'to illicitly reexport controlled items to Iran in violation of U.S. export control laws.'
Smartphone shipments will grow 5.7% in 2016, with iPhone shipments declining 0.1%, says IDC.
