Xiaomi Quarterly Sales Fall on Waning Smartphone Demand
Xiaomi Corp.'s quarterly revenue fell almost 10% as it battled a slumping global smartphone market and weak consumer demand at home.
The Beijing-based company logged sales of 70.5 billion yuan ($9.85 billion) and net loss of 1.5 billion yuan for the quarter through September, reflecting a writedown of almost 3 billion yuan on items such as investment losses. Analysts had expected 70.2 billion yuan revenue and 1.8 billion yuan net profit on average. Adjusted net income exceeded analysts' estimates.
China's Covid Zero policy has sown chaos across the country's tech industry and supply chains, depressing economic activity. At the same time, electronics demand is cooling as shoppers react to elevated inflation and slowing economic growth.
Global smartphone sales are set to decline 2.9% next year following a 12.2% slump in 2022, Jefferies predicted this month. Xiaomi's unit sales will decrease this year and next, before recovering slightly in 2024, Jefferies forecast. Phones sold in recent years are well-built, leaving consumers with no need to purchase new ones, Jefferies analysts including Edison Lee and Nick Cheng said in the Nov. 9 note. New models are adding few new innovations, they said.
“Structural weakness is worse than expected,” the analysts said, and the challenges are “compounded by a weak economy.”
What Bloomberg Intelligence Says
China's smartphone sales downturn could extend to 2023, even though the shipment decrease narrowed in September. A boost from the iPhone 14 launch could be one-time and Android weakness looks to be overwhelming in the following months. Persistent drops in corporate PC shipments indicate business outlook is still cautious post-lockdown.
-- Steven Tseng and Sean Chen, BI analysts
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