Bottom line: Apple will continue discounting its iPhones in China to stop its sinking market share, which could slow but not halt its decline in the face of growing competition from the likes of Huawei.
Apple’s retail partners pare back China iPhone prices
Following a break of a month, I’m returning to my writer’s seat with discussion of the China outlook for tech giant Apple(Nasdaq: AAPL), which has turned to a very un-Apple-like strategy of discounting its products in the world’s largest smartphone market. China has been a fickle place for Apple, at one point accounting for nearly a quarter of the company’s global sales, as brand-conscious Chinese paid big premiums for trendy iPhones. That’s hardly the case now, with China accounting for just 15.6 percent of Apple’s total sales in its last quarterly report. Read Full Post…
Bottom line: Xiaomi’s stock is probably oversold at current levels due to selling at the end of a lockup period, but will remain an underpeformer for at least the next 1-2 years until it can prove its strategy of moving up-market has legs.
Xiaomi’s stock takes a bath
It’s been a rocky week so far for smartphone wannabe Xiaomi(HKEx: 1810), which is desperately trying to show investors it’s more than just a maker of cheap, low-margin products. The company is getting set to unveil a new strategy to show it plans to wean itself from the low-end phones that are its bread-and-butter, with an upcoming announcement that it will spin off its popular Redmi line of cheaper models. (English article)
But that hasn’t stopped investors from dumping Xiaomi shares en masse over the last two days, in a major no-confidence vote over whether the company can actually execute that strategy. We should be fair here and note that the share dumping that has seen Xiaomi’s stock tank by more than 10 percent is at least partly due to the expiry of a lockup period following its blockbuster IPO last year. Read Full Post…
Bottom line: Huawei’s new push into India looks like a smart and well-timed move to take advantage of the country’s emerging middle class, and could help it take the global smartphone crown by the end of next year.
Huawei takes aim at India
As it creeps up on its goal of becoming the world’s largest smartphone maker, the controversial Huaweiappears to finally be waking up to the potential of the fast-growing India market. That’s the key takeaway from some Indian media reports last week, which quoted a company executive saying Huawei is planning a major push into an India market that it has largely ignored up until now.
The bigger theme in this particular story is that India is quickly emerging as a market not to be taken lightly on the smartphone scene. Global leader Samsung(Seoul: 005930) learned that early on, and until recently was the market leader before getting eclipsed by China’s Xiaomi(HKEx: 1810). I was quite surprised when doing some quick research for this post to learn that India actually passed the US to become the world’s second largest smartphone market in the third quarter, behind only China. Read Full Post…
Bottom line: Huawei could challenge Samsung for the global smartphone crown in as little as a year, though a potential Achilles heel could be the “outing” of its surging Honor brand that most may not associate with the Chinese parent.
Huawei passes Apple in global smartphone ranks
Smartphone pioneer Apple(Nasdaq: AAPL) has just reported its latest quarterly results, which means that all the data tracking firms can simultaneously release their own industry data showing the latest trends. Those trends show that Apple’s sales were basically flat for in the quarter on a unit basis, even as the bigger story was that the US giant lost its spot as the world’s No. 2 smartphone seller to a surging Huaweiduring the period.
The big picture is less that Apple is losing market share, and more that Huawei is surging in its march toward market dominance. Part of the reason behind the surge is booming popularity for Huawei’s sub-brand called Honor, which perhaps doesn’t carry the same stigma of the Huawei name. Read Full Post…
Bottom line: Xiaomi appears to be gaining confidence of investors through moves like its entry into South Korea, but it will take at least another year to prove it really has the savvy to thrive over the longer term.
Xiaomi calls on South Korea
Newly listed smartphone maker Xiaomi(HKEx: 1810) has kept the world guessing these past two weeks with its on-again-off-again performance both on the Hong Kong stock exchange and now in the real world. The former is a reference to its stock, which did quite poorly in the run-up to its trading debut last Monday but has done a U-turn since then and posted some impressive gains.
The latter is a reference to the company’s latest strategic move, which has it launching its low-end smartphones in South Korea. That may not sound like much, since the market is relatively small and Xiaomi already sells its products in more than 70 countries and regions globally. But the symbolic significance is quite large, since South Korea is home to leading global smartphone maker Samsung(Seoul: 005930). Read Full Post…
Bottom line: Xiaomi’s stock is likely to be volatile over the next year and could move broadly downward as investors wait to see if the company’s comeback has legs and it can move into higher-end products.
Xiaomi fizzles in trading debut
Smartphone maker Xiaomi(HKEx: 1810) seems to have become the proverbial lead zepplyn sinking further and further into the mire as it finally made its trading debut in Hong Kong. The company has been dogged by skepticism almost since the get-go of its blockbuster IPO, which ended this morning here in Asia with the stock’s official trading debut. The question from here now becomes: how far will the stock sink before it finds a bottom, and what are its real prospects over the mid- to longer-term?
Let’s jump right in with the news, which had Xiaomi shares dipping 2.3 percent when their long awaited trading began here in Hong Kong on Monday morning. The shares opened at HK$16.60, versus an IPO price of HK$17. Things didn’t get much better after that, and the stock was down to HK$16.36 the last time I checked midway through the morning session. Read Full Post…
Bottom line: Xiaomi is likely to quietly settle a copyright infringement lawsuit against it by Coolpad, which is opportunistically looking for some hush money before Xiaomi’s IPO and can’t afford a long drawn-out court battle.
Coolpad sues Xiaomi as latter’s IPO draws near
In a move that smells of desperation, down-and-out smartphone maker Coolpad (HKEx: 2369) has filed a lawsuit against the up-and-coming Xiaomi. Anyone with half a brain will know the timing of this lawsuit looks quite suspicious, since Xiaomi is getting ready to make what could be this year’s biggest IPO in the next month or so, likely to raise up to $20 billion.
It’s quite difficult to know if this particular lawsuit has any merit, though we do know that Coolpad was an early hot player in the smartphone space and thus may legitimately hold some intellectual property similar to things that Xiaomi is now using. But the fact of the matter is that Coolpad can hardly afford to wage a long and potentially costly legal battle. Instead, it is probably hoping for a quick settlement to give it some much-needed cash to continue funding its money-losing daily operations. Read Full Post…
Bottom line: Lenovo’s ejection from the Hang Seng Index caps its long fall from grace over the last four years, and leaves the company in an increasingly deep hole that may be hard to emerge from.
Lenovo ejected from Hang Seng Index
Capping its long fall from grace, PC giant Lenovo (HKEx: 992) has been officially booted from the Hang Seng Index, in a move that looks highly symbolic but also has some very real ramifications for this former high-flyer. It’s probably too early to relegate Lenovo to the history books, but we can certainly say the company is down for the count with this latest blow.
As someone who has followed Lenovo for most of its life as a listed company, I can provide my own view that the company is certainly facing a life-or-death moment in its lifetime that dates back more than three decades, making it one of China’s oldest tech names. I have called repeatedly for the departure of CEO Yang Yuanqing and introduction of some newer, younger blood to the company’s top ranks. But it doesn’t seem that Yang’s boss, Lenovo founder Liu Chuanzhi, cares too much what I think, as he has repeatedly stuck with this right-hand man throughout the company’s decline. Read Full Post…
Bottom line: Xiaomi is hoping to attract investors to its IPO through its recent strong revenue growth, but it could still be years before it becomes profitable due to heavy reliance on low-end, low-margin products.
Xiaomi growth banks on cheap products
Everyone is fawning over the newly released IPO prospectus from Xiaomi, the smartphone maker that is aiming to make what’s likely to be the biggest listing of all time by a company from its class. Most eyes seem to be focused on the company’s top line, headlined by revenue that grew 67.5 percent last year. But from my perspective, the picture isn’t all that attractive due to the company’s huge loss, along with data that show it is clearly stuck at the lower end of the global smartphone market in terms of brand positioning.
None of that is necessarily that bad, since Xiaomi, whose upcoming Hong Kong IPO is likely to be one of this year’s largest, is clearly in an early stage of its development. Most major brands today didn’t start out as premium names. Classic cases in that category are the Japanese and Korean electronics makers, most of which started off as makers of low-end but relatively reliable cheap products that made the “made in Japan” label at one time the equivalent of the “made in China” label now. Read Full Post…
Bottom line: Skidding sales in China’s oversaturated smartphone market are long overdue, and could claim Gionee as a first major victim by year-end.
China smartphone sales slide in Q1
The inevitable is finally happening, and China is showing signs of smartphone burnout. The latest government data is showing that first-quarter smartphone sales in China plunged 26 percent, which is one of the largest drops I can ever recall. In this case we can’t really blamed the usual seasonal effect, since this is a quarterly number that includes both January and February — the two months when Lunar New Year falls.
At the same time, separate reports are citing a top executive at second-tier smartphone maker Gionee shooting down rumors that his company may not pay some of its suppliers due to funding shortages. This comes just weeks after the company made mass layoffs at a major production facility in the southern city of Dongguan, and is one of the stronger signals of distress I’ve seen from China’s bumper crop of second-tier smartphone makers. Read Full Post…
Bottom line: Huawei’s strong revenue and profit growth for 2017 are coming largely on the back of its home China market, which should continue to boost the company as Beijing aggressively pushes upcoming 5G services.
Huawei finds land of plenty in hometown market
Telecoms giant Huaweiis in the headlines as the new week begins, with word that the company has rekindled its profit growth in its latest reporting year. Unlike other companies, Huawei isn’t publicly traded and thus isn’t required to release any financials, which always means we need to take their numbers with a slight grain of salt. But generally speaking the company does seem to be trying to report meaningful figures, at least based on past years when the results weren’t all that flattering.
This time around the results look good, at least the final ones for revenue and profit growth. But a closer look shows something that many of us know, namely that the company is heavily dependent on its home market for that relatively strong showing. Some of that is probably deserved, as Huawei has emerged as a maker of quality products for both its core networking equipment and also its newer smartphones, which count myself as one of their fans and owners. Read Full Post…
