What’s Going On Here?Xiaomi reported better-than-expected results on Tuesday, so the world’s third-biggest smartphone maker might want to get used to life as a leader. What Does This Mean?Festive shoppers flocked to Xiaomi’s updated lineup last quarter, keen to snap up phones with the latest chips, camera sensors, and operating systems. Those holiday sales helped the Chinese smartphone giant ship 3.9% more units around the world last quarter than the same time the year before – while the wider industry shipped 3.2% fewer.
Xiaomi's profit, then, grew by a better-than-expected 40% last quarter compared to the year before. And if investors weren’t already seeing dollar signs, this might’ve done the trick: the company plans to buy back more than $1 billion worth of its own shares, reducing their supply and pushing up their price. Add in that it expects supply issues to ease up in the second half of the year, and investors couldn’t complain: they sent its shares up 6%. Why Should I Care?The bigger picture: World domination. Xiaomi wants to keep that momentum going, so it’s currently in talks with Indian manufacturers to make phones there to export globally. That could be a good move: India’s the world’s fastest-growing smartphone market, so more exposure there should be great for sales. And since the government hands out cash incentives to companies that boost India’s electronics manufacturing sector, Xiaomi can give its bottom line a boost by spending less on production there.
Zooming out: Xiaomi’s a trendsetter. Xiaomi’s not the only one buying back its shares: Alibaba upped its buyback program by $10 billion on Tuesday. The tech giant will be hoping that’ll restore investors’ confidence in the company, after slowing growth and government crackdowns sent its shares down to multi-year lows. And since analysts reckon a bunch of Chinese tech firms could follow suit, that might explain why fellow tech companies JD.com, Tencent, and Baidu also saw their shares soar after the news. |