Chinese smartphone maker Xiaomi Corp just reported its earnings for its third-quarter ending on September 30. Increased domestic competition and slowing demand for its products have resulted in its slowest-ever quarter revenue growth.
Total revenue for Xiaomi's smartphone business, which accounts for most of its earnings, had dropped by 8 percent to $4.6 billion for the quarter when compared to the same period last year. The company reported total sales of around 32.1 million smartphones for the period, which is a million units fewer during the same period last year.
Xiaomi attributed its lower revenues to the increase in market share of its larger rivals such as Huawei Technologies and the overall lesser demand for smartphones in China. The company explained that more people are now holding on to their devices longer, drastically reducing demand for newer models.
The Beijing-based company also mentioned that it has seen more customers rally to the Huawei brand following the restrictions that were placed on the company by the United States back in May.
Xiaomi executives explained during its earnings call that the company is trying to boost its revenues from its other businesses, such as its internet services division. However, the unit still only accounts for around 10 percent of its total revenues.
Total revenues for the period had risen by 5.5 percent to 53.7 billion yuan or around $7.64 billion, hitting analysts' expectations for the quarter. Driving up its revenues has been Xiaomi's continued efforts to expand its sales abroad. The company has managed to increase its overseas revenues, but its domestic sales have continued to suffer.
Investors have so far been unimpressed with the company's performance this year as evident in the drop in its stock prices. Since the start of the year, Xiaomi's stocks have dropped by almost a third of its value since the start of the year, closing at HK$8.75 on Tuesday.
To improve its bottom line in the coming quarters, Xiaomi plans to go ahead with the aggressive rollout of its new 5G-capable handsets next year. The company is banking on the increasing availability of next-generation technology to push consumers to purchase new 5G handsets.
So far, Xiaomi has released two new 5G-capable models, one in China and another model in Europe. Xiaomi chief executive, Lei Jun, mentioned in an interview last month that the company plans to release at least 10 new 5G-capable smartphones next year. The new models will range from budget offerings to more expensive flagship units.
