Xiaomi Reports 87 Percent Drop In Net Profits Amid Global Smartphone Slowdown
Smartphone manufacturers have been feeling the pinch as the global handset market continues to slow down. This has become evident in the latest earnings report of the world's fourth-largest smartphone manufacturer, Xiaomi Corp.
The Beijing-based company released its earnings report on Tuesday, revealing a surprising but somewhat expected 87 percent drop in its net profits for its latest quarter ending in June. Xiaomi's second-quarter fell to around $284 million, a drastic drop from the $2.07 billion profit it reported over the same period last year.
Despite the drop in profits, the company did report a 15 percent in its revenues to around $7.36 billion. The revenue, which is up from the $6.41 billion it reported over the same period last year, was boosted mainly by the increase in the average selling price of the company's products this year.
According to Xiaomi founder and chairman Lei Jun, the company is still on track to take advantage of major growth opportunities in the currently ailing smartphone industry. The executive revealed that the company will mainly be focusing on its research and development capabilities and its various investments to boost its earnings in the coming quarters.
Lei specifically mentioned key technologies that the company will be heavily focusing on, namely areas in artificial intelligence, 5G network connectivity, and the Internet of Things (IoT) applications. As for its investment, Xiaomi currently has stakes in more than 270 companies globally, with an aggregate book value of around $4.07 billion.
Xiaomi's chief financial officer, Chew Shou Zi, hinted at the company's conference call that they will be taking advantage of the ongoing commercialization of 5G network technology in China and overseas. Xiaomi had already released its first 5G capable smartphone in Barcelona back in February.
The company plans to release a second 5G-capable handset in China sometime during the second half of the year.
Apart from its domestic efforts, Xiaomi has been doubling down on its overseas expansion. The Hong Kong-listed manufacturer mentioned to investors that it plans to continue building its retail channels outside of China. Xiaomi currently has around 520 retail stores, called Mi Home stores, spread across several major countries.
The company has increased its overseas retail outlets by 92.6 percent this year. Aside from its large Mi Home stores, Xiaomi has also set up smaller Mi Stores in various overseas markets. In India, Xiaomi has more than 1,790 Mi Stores, catering mostly to mass-market buyers and rural areas.