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|Day's Range||1.6500 - 1.6900|
|52 Week Range||1.0700 - 1.8000|
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(Bloomberg) -- Tencent Holdings Ltd. is marketing its first dollar bond deal in more than a year, joining a growing band of Chinese borrowers in a recovering offshore debt market.The Wechat operator is offering a four-tranche deal Wednesday, drawing down from its existing global medium term notes program, according to people familiar with the matter, who are not authorized to speak publicly. The deal includes its first potential 40-year dollar note, the longest tenor by Tencent, Bloomberg-compiled data show.The Chinese social media giant is raising funds for debt refinancing and general corporate purposes, the people said. The company didn’t immediately respond to an emailed request for comment.Higher quality Chinese borrowers have flocked back to borrow offshore after a March sell-off roiled markets and saw issuance dry up. Strong appetite boosted orders of Chinese dollar bonds to seven times their issuance size in April, with Baidu Inc. raising $1 billion and Xiaomi Corp. selling its debut dollar bond.As U.S. treasury yields “remain near historical lows and the curve remains pretty flat, it makes sense for corporate to secure long capital at low cost,” said Angus To, Hong Kong-based deputy head of research at ICBC International Holdings. Tencent’s initial price targets are fair considering the new issue discount, he said.Final pricing could tighten further given the solid market sentiment toward investment grade names, he added.Tencent’s deal also comes as Hong Kong protesters prepare for what could be their biggest day of unrest in months against China’s increasing control over the city. Hong Kong police has deployed a large number of officers downtown to deter demonstrations.The appeal of attractive borrowing costs aside, China’s largest Internet firms remain hungry for cash as they increasingly expand beyond their comfort zones and wade onto each other’s turf, an expensive exercise that mirrors Silicon Valley’s evolution of years ago.Tencent received a $6 billion foreign bond sale quota from China’s top economic planning agency, Bloomberg reported on Tuesday, citing people familiar with the matter. The firm may not use the full quota for their issuance, they said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
A year has passed since Huawei Technologies was put on a blacklist by the US government, banning US companies from selling to the Chinese telecoms group. Nikkei, together with Tokyo teardown specialist Fomalhaut Techno Solutions, took apart Huawei’s flagship model, the Mate 30, to analyse the parts that have gone into the Chinese electronics maker’s top-of-the-range smartphone. At a glance, parts made in China now form 42 per cent of the total value of components, up from about 25 per cent when Huawei was still able to buy from US companies.
A week ago, Xiaomi Corporation (HKG:1810) came out with a strong set of quarterly numbers that could potentially lead...
Xiaomi, the Chinese comapny famous for its budget smartphones and a bevy of value-for-money gadgets, said in a filing on Thursday that it has backed more than 300 companies as of March, totaling 32.3 billion yuan ($4.54 billion) in book value and 225.9 million yuan ($32 million) in net gains on disposal of investments in just the first quarter. The electronics giant has surely lived up to its ambition to construct an ecosystem of the internet of things, or IoT. Most of its investments aim to generate strategic synergies, whether it is to diversify its product offerings or build up a library of content and services to supplement the devices.
(Bloomberg) -- At the height of India’s coronavirus lockdown last month, an attorney seeking bail for a client in the western state of Rajasthan came up with a novel way to beat the scorching summer heat. He simply appeared before the judge in his undershirt during a hearing conducted from home by video conference.Incensed by the absence of any formal courtoom garb, the judge adjourned the case, reprimanding counsel for wearing a “baniyan” – the thin white, sleeveless vest meant to be worn as an undergarment.As workers worldwide wrestle with the norms of home video conferences -- the de facto meeting rooms of the coronavirus era -- tensions are running particularly high in India. The country has grappled with what’s essentially the world’s biggest quarantine after the government issued stringent rules that have kept its 1.3 billion people largely contained at home. Millions have to work out of modest, crowded houses, surrounded by all the chaos of multi-generational families. And they must contend with the unreliable internet services and power blackouts that plague many parts of the nation.Meanwhile, many Indians have historically had little work-from-home experience. All that’s playing a role in bringing productivity to an all-time low as one of the world’s fastest-growing large economies hurtles towards a contraction.Shrill WhistleThese days, Corporate India’s morning stand-up meetings – conducted via video conferencing services like Zoom -- are routinely interrupted by the piercingly-shrill whistle of the pressure cooker, the ubiquitous kitchen appliance that’s essential to Indian cooking. Meanwhile, a parade of relatives and broom-toting house help might wander across the frame in homes that include everyone from the in-laws to great grandparents.”The pressure cooker siren is the most routine annoyance during video calls,” said Shashidhar Sathyanarayan, co-founder of Iowa and Bangalore-based agritech startup Arnetta Technologies, who has been stuck in San Jose due to India’s travel restrictions. During formal meetings, his co-founders scurry into rooms with closed doors to prevent the screech of the kitchen appliance from disturbing their calls, he said. And his wife, also a technology executive, now ensures it’s never on during her meetings.The smartphone is ubiquitous, but it’s also the very first personal computing device for a majority of Indians, and about half the country’s 500 million internet users have leapt into the digital world only in the last few years. They are simply unused to video conferencing apps and mostly muddle through, said Bangalore-based environment activist Surabhi Tomar.On a Zoom call last week for lake rejuvenation campaigners from across the country, she watched one of the participants struggle with the audio. Then, to the chagrin of nearly a dozen participants, he held the mobile phone close to his ear without turning off the video. “For the duration of the hour-long call, the rest of us peered into the hairy insides of his ear,” said Tomar. “It wasn’t a pretty sight.”Power OutagesThe trials of transitioning to this brave new world in India have reached even the top rungs of the corporate ladder. Large outsourcing providers like WNS Holdings Ltd. are providing etiquette training, schooling employees on basics such as dressing for video conferences, muting mikes and managing the background.Last week, during a virtual media conference to explain the impact of the lockdown on the Indian business and phone production at China’s Xiaomi Corp., India head Manu Jain suffered the embarrassment of repeatedly dropping off the call. Reappearing for the second time, Jain apologized for the power outage at his home. When he confessed to a similar situation at a recent video conference with the Xiaomi board, one reporter cheekily suggested in the Zoom chat box that he try a Mi powerbank, a portable battery pack sold by the company.During the post-earnings leadership commentary of Indian outsourcer HCL Technologies Ltd., its global human resources head Apparao VV couldn’t make his video work. He soldiered on, speaking via audio, until he was able to get the video working. Minutes later, he gave out this ironic statistic: 100,000 HCL employees had successfully participated in 100 million hours of video conferencing during the pandemic.Among those grappling with the virtual meetings are teachers, many of them older Indians struggling ineffectually to manage online classrooms filled with digital-native schoolgoers. And one of the most mortifying fallouts may have been felt by Byju’s, the online learning app that’s backed by the Chan Zuckerberg Initiative and other high-profile global investors. In a recording shared widely on the internet earlier this month, a Byju’s manager uses choice Hindi expletives to berate his sales executive for not completing a sale.Hundreds of people online castigated the startup. Byju’s has since announced that the manager has been “terminated”.Leasing LaptopsNot everyone is unhappy, and the latest requirements of workers have opened a new niche for entrepreneurs like Sawan Laddha. The founder and chief executive officer of co-working startup Workie, headquartered in Indore in central India, has pivoted to solving the work-from-home challenges of regular people.Workie supplies work tables, chairs and leases laptops and wifi routers. It installs battery back-up systems so work can continue through power outages. In the past weeks, Laddha has helped over 1,000 workers get up and running. He says demand is red hot for one particular item: Green screens that help block out messy living conditions from bosses, co-workers and clients. “In the next two years, we plan to set up a million Indians to work from home,” Laddha said.Meanwhile, a plea by the Bar Council of India, which represents the country’s lawyers, could offer a reprieve to vest-wearing attorneys. It’s called for Indian courts to ban video conferencing after the lockdown, saying advocates and judges are unaware of its nuances.In a letter to the chief justice of India’s Supreme Court, the chairman of the council said that if video conferences become a permanent fixture they could put most attorneys out of work and “more than 95% of the advocates of the country will become brief less and work less.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Sales at Xiaomi are on the up, despite lockdowns. The Chinese smartphone maker reported a 13.6 percent jump in first-quarter revenue on Wednesday (May 20). That as it sold more phones, including higher-priced 5G models. After the pandemic hit production, Xiaomi says it’s almost fully back up and running. It says demand has recovered, with overseas sales rising too. Xiaomi makes most of its money on handsets, but also sells online ads and other types of hardware. Sales in the first quarter rose to 7 billion dollars, comfortably ahead of analyst forecasts. It’s all a contrast with rivals Apple and Samsung, which have both warned of a tough year ahead. Meanwhile domestic rival Huawei faces mounting U.S. restrictions over allegations - all strongly denied - that it’s a risk to national security. Xiaomi can’t shrug off China’s shrinking phone market though. Total first quarter sales to local consumers were down almost a fifth on the year. Like Chinese rivals, that has Xiaomi looking to overseas markets for growth.
(Bloomberg) -- Xiaomi Corp. reported a quarterly profit that beat analysts’ estimates after the Chinese smartphone maker got half its revenue from outside its home market for the first time.China’s largest smartphone brand after Huawei Technologies Co. said adjusted net income rose 11% in the three months ended March to 2.3 billion yuan ($324 million), compared with the 2.1 billion-yuan average of estimates. Sales rose 14% to 49.7 billion yuan, powered by a 47.8% jump in overseas revenue.Xiaomi managed to grow its global shipments by 6.1% in the past quarter even as total worldwide volume shrank 11.7%, according to research firm IDC. Beijing-based Xiaomi’s strength in online device sales served it well during the coronavirus period, particularly in Western Europe where shipments increased by almost 80%, according to research firm Canalys. In India, the company’s sales increased thanks to new budget phones released before a nationwide lockdown was declared.Revenue from Internet of Things products and online services maintained strong growth in the quarter. Xiaomi has been diversifying its major sources of revenue beyond smartphones, introducing a wide range of connected products from TVs to smartwatches. It also sells online advertising in China.What Bloomberg Intelligence SaysXiaomi’s smartphone gross profit is poised to surge as last year’s brand revamp hurt margin, even as average selling prices likely tanked on lower China sales mix. Higher revenue from online games and other services such as fintech could have lessened the probable advertising sales slump.\-- Anthea Lai, senior analystClick here for the research.Xiaomi faces a difficult second quarter as Covid-19 containment efforts in key markets including India and Spain are poised to dampen sales. “The different levels of lockdown measures adopted in overseas markets are expected to affect our performance in the second quarter of 2020,” the company said in a statement.Geopolitical tensions are also stoking uncertainty for Xiaomi’s supply chain. The Trump administration has moved to prevent chipmakers using U.S. technology from supplying Huawei, and China has vowed to retaliate. Qualcomm Inc., Xiaomi’s most important processor provider, may be among Beijing’s potential targets. The U.S. chipmaker is also one of Xiaomi’s earliest investors and its mobile CPUs power the company’s entire product line.(Updates with overseas sales from the first paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Xiaomi Corp reported a 13.6% rise in first-quarter revenue on Wednesday, beating estimates, as the Chinese smartphone maker sold more phones and benefited from sales of its higher-priced 5G models. "Our production in mainland China has largely resumed, and smartphone demand has rebounded quickly," the company said in its first-quarter earnings release. Xiaomi's optimism stands in contrast to rivals Apple Inc and Samsung Electronics Co Ltd, which have both warned of a tough year ahead.
Xiaomi's's (HKG:1810) stock is up by a considerable 22% over the past month. Given the company's impressive...
Xiaomi on Tuesday unveiled the global version of MIUI 12, the latest update to its Android -based operating system, for hundreds of millions of smartphones as the Chinese electronics giant pushes to broaden its services ecosystem. The world's fourth largest smartphone firm said it is delivering a range of new features to its overseas users with MIUI 12, including a revamped user interface, the ability to cast the phone screen without the need to connect it to a computer, improvement to multitasking support and battery life and more privacy controls to users. A company executive said animation renders slightly differently after installing MIUI 12, stretching more naturally across the screen -- especially on smartphones with rounded corners -- as a user taps on an app.
(Bloomberg) -- Hong Kong’s Hang Seng Index will include dual class shares and secondary listings, allowing Chinese giants such as Alibaba Group Holding Ltd. into the city’s benchmark to provide a potential boost for passive investors who have for years struggled with lackluster returns.Hang Seng Indexes Co., announced the long-awaited change on Monday in Hong Kong, a step that will help move the benchmark away from a heavy dominance of financial shares. Dual class and secondary listings will each be subject to a 5% weighting cap, surprising some investors who had been hoping for a 10% weighting for Alibaba, for example.The move came after “overwhelming market support,” HSI said. Any changes will come into effect during the August 2020 index review and encompass only companies coming from Greater China.The shift will affect about $30 billion in pension fund assets and exchange-traded funds that track the index, and could spur a flood of local share sales by U.S.-listed firms. Dual class shares were long blocked from listing in Hong Kong due to concerns over the unequal voting rights until Xiaomi Corp. became the first in 2018. Alibaba joined the bourse last year after a $13 billion secondary listing.Meituan Dianping, China’s largest food-delivery website, is also a potential candidate for inclusion, while JD.com Inc. is considering a secondary listing of its own in the city.“It’s a bit surprising to me that Hang Seng caps the market weight at 5%,” said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai Co. “But it’s understandable, since the indexer might want to take it step by step to avoid a sudden change on the Hang Seng Index, since each tech firm is relatively very big by market cap.”Wen expects the cap to lifted eventually to 10%, “but it won’t happen in the next 3 to 6 months.”Daniel Wong, a director at HSI, said at a press conference that the cap “has room to rise.”About half of the total weighting of the Hang Seng Index is in financial firms, compared with about 15% on average for benchmarks in Europe, the U.S., Japan and mainland China, according to data compiled by Bloomberg. The gauge has gained 1.7% a year on average in the past decade, versus 5.2% for the MSCI All-Country World Index. In January, the Hang Seng approached its lowest level relative to the MSCI measure since 2004.HSI said that any shares that carry weighted voting rights, typically those held by the founders of the company, will be considered as non-freefloat, and not eligible for the index. While for secondary listings, any shares held as overseas depositary receipts will be ineligible, further limiting the impact of Alibaba on the index.“Aibaba has about 20% of total outstanding shares in Hong Kong and the remaining are in the U.S.,” said Steven Leung, executive director at UOB Kay Hian (Hong Kong) Ltd., by phone from Hong Kong. “Even if WVR shares and U.S. portions are not counted as free float in Hang Seng’s calculation, it still easily has a 5% weight if included into the index.”Separately, the HSI consultation conclusion also said no additional limits will be placed on financial stocks.Managers of passive index pension funds will now have to follow the adjustment to include weighted voting rights shares, said Michael Chan, managing director of Hong Kong-based Gain Miles MPF Consultant Ltd. Despite institutional concerns over the corporate governance issues of dual class share companies, which gives some shareholders more weight than others, Chan said it won’t create much stir locally since retail investors are largely indifferent to how their pension money is placed.(Adds comment from HSI in eighth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The compiler of Hong Kong's benchmark stock index will for the first time admit companies with weighted voting rights (WVR) and those with secondary listings, as constituent stocks.The decision, announced by the Hang Seng Indexes Company on Monday after a two-month consultation, paves the way for technology giants such as Xiaomi, with its WVR structure, and Alibaba Group Holding, with its secondary listing, to be included in the index.It marks the most important revamp of the 50-year-old Hang Seng Index since the inclusion of H-shares in 2006.The earliest possible time for the inclusion of new stocks will be August.The reform aims to make sure the benchmark index tracking Asia's third-largest stock market includes the most valuable stocks. The index has until now excluded WVR and secondary-listing companies even though they are the largest and most traded shares in Hong Kong. Allowing China's tech giants onto HSI is vital for benchmark's future, says boss"The decision to add these companies into the Hang Seng Index is strongly supported by the market, with 90 per cent of respondents are in favour," said Vincent Kwan, chief executive of Hang Seng Indexes in a telephone conference after the announcement. "The change will be an important milestone for the Hang Seng Index to cover the increasing number of technology companies listing in Hong Kong."The weighting of the companies in the index will be capped at 5 per cent, below Tencent Holdings, AIA and HSBC " the three largest stocks in the index, each capped at 10. The limit is aimed at preventing a single stock from becoming too prominent.Kwan said many respondents wanted to see a limit on the proportion of these companies that make up the benchmark index because a secondary-listed company can get around some of the exchange's disclosure requirements. Some investors consider that the WVR structure is not fair to all shareholders.For the secondary listing companies, the index compiler will only count the shares registered in Hong Kong. Alibaba had about 23 per cent of its issued shares registered in Hong Kong at the end of March.Before the announcement after the market closed on Monday, investors had bet on the news. Alibaba jumped 3.1 per cent to close at HK$203, Meituan Dianping rose 2.1 per cent to HK$121.9 while Xiaomi edged up 0.7 per cent to HK$12.04. The Hang Seng Index increased 0.6 per cent to close at 23,934.77."It is a good move. It reflects the Hong Kong capital markets is moving closer to the mainland trend in which technology companies are playing an important role in the market," said Frederick Chu Ian-kit, head of ETFs at China Asset Management (Hong Kong). "The Hang Seng Index, as the signature index of Hong Kong, will catch up on this trend. It will also encourage more US-listed technology firms to have a secondary listing in Hong Kong."To compete with other financial hubs, Hong Kong changed its rules in April 2018 to allow companies with WVR " a structure that allows founders and key managers to own shares with more voting rights than others " to seek IPOs here. It also makes it easier for US-listed technology firms to have secondary listings here.Alibaba, which listed in New York in 2014, raised US$13 billion in a secondary listing in Hong Kong in November. It is the largest listed company in Hong Kong in terms of market capitalisation, at HK$4.32 trillion (US$557.3 billion), representing 12 per cent of the city's total market cap.Alibaba, the owner of the South China Morning Post, has not been qualified to join the Hang Seng Index because of its secondary listing status. The compiler said in the consultation paper that it needed to open the door as it expected more US tech firms to list here.Chinese e-commerce company JD.com has filed for a secondary listing in Hong Kong to raise US$2 billion at the end of this month, according to market sources, while gaming company NetEase is also reported by Bloomberg to be doing the same thing soon.Alibaba, food delivery firm Meituan Dianping and Xiaomi are the three WVR companies listed in Hong Kong now, and the trio always rank among the top five most traded stocks in the city.Together they commanded almost HK$5.3 trillion (US$679 billion) in market value at the end of 2019, about 56 per cent of the current market capitalisation of the Hang Seng Index.The Hang Seng Index, launched in November of 1969, has 50 constituent companies and tracks the biggest and most liquid stocks in the city.There are currently 23 exchange-listed products tracking the Hang Seng Index, representing more than US$20 billion in assets under management. On average, over 280,000 HSI futures and options contracts were traded in Hong Kong daily last year.The value of Mandatory Provident Fund (MPF) assets invested in funds tracking the Hang Seng Index is about US$8 billion, according to data released in the consultation paper. The MPF is Hong Kong's compulsory retirement pension plan.The inclusion of secondary listing companies in the Hang Seng Index will raise hopes that the mainland's watchdog, the China Securities Regulatory Commission (CSRC), will admit those firms' shares into the stock connect schemes, which allow cross-border trading by investors in Hong Kong and the mainland.This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.
Tougher scrutiny of foreign investment in India has soured the plans of China's smartphone manufacturers seeking to expand beyond selling hardware for a bigger share of the South Asian country's competitive financial services market. Xiaomi and Oppo, with more than 100 million in combined smartphone users in India, cannot directly lend to consumers without a shadow banking licence and have partnered with Indian financial companies to provide the funds for services offered on their platforms. Xiaomi in December launched its online lending service MiCredit in India, connecting users with Indian lending firms to access small loans.
POCO, a brand that spun out of Chinese electronics giant Xiaomi earlier this year, today launched the POCO F2 Pro smartphone as it continues its new journey as an independent firm. The POCO F2 Pro, like its two-year-old sleeper hit predecessor Pocophone F1 smartphone, punches above its price class. It features an all-screen 6.67-inch full-HD+ AMOLED display (with 2400×1080 pixels), in-screen fingerprint scanner, support for 5G, quad-core rear camera setup and a pop-up front camera that quietly tucks away when not in use.
Xiaomi, Vivo, Samsung, Oppo and other smartphone companies have received approval from some state governments in India to partially resume manufacturing and assembling of devices amid the ongoing lockdown in the world’s second largest handset market that completely shut operations at these plants in late March. The companies said that they have secured permission to kick start their manufacturing operations in the country, though several restrictions such as operating with limited workforce are still in place.
Xiaomi today launched a new e-commerce service in India that allows people in the nation to easily browse and order its handsets and other products from nearby physical retail stores as the Chinese giant rushes to kickstart its sales in its biggest overseas market. Dubbed Mi Commerce, the service allows people to locate nearby stores that are either run by Xiaomi or those that have tie-ups with the company and browse smartphones, TVs, electric lamps, and a range of other products. Users can express their "interest" to purchase the selected item through the app that would prompt the retail store to place a confirmation call.
Chinese smartphone maker Xiaomi Corp said on Monday it will launch an e-commerce service in India this week to enable customers stuck at home during a nationwide lockdown to buy its products from their local retailer. The new service, Mi Commerce, will allow consumers to browse online products available at a store close to their home and place orders, Muralikrishnan B, chief operating officer of Xiaomi India, said. The service will be rolled out across India and Xiaomi will continue it after the lockdown ends if it is successful.
(Bloomberg) -- Global shipments of smartphones fell at the fastest rate on record in the first quarter, illustrating the devastating impact of Covid-19 on consumption and production in the critical segment of the technology industry.Shipments totaled about 275 million in the first three months of the year, according to market trackers Strategy Analytics and IDC, which estimate the decline from the same period in 2019 at 17% and 11%, respectively. Their numbers vary slightly because they estimate results from a range of manufacturers. Both firms attribute the shortfall largely to the novel coronavirus outbreak, which hurt the supply chain -- with factories across Asia having to shutter temporarily to constrain the spread -- as well as demand due to widespread lockdowns that included retail stores.“What started as primarily a supply-side problem initially limited to China has grown into a global economic crisis with the demand-side impact starting to show by the end of the quarter,” said Nabila Popal, research director at IDC.Read more: Key Smartphone Supplier Forecasts 10% Drop in DemandBellwether supplier Murata Manufacturing Co. had said in mid-April that most of its customers were maintaining order volumes and road maps through the rest of the year, but on Thursday it revised that outlook with a forecast of a 10% slump in demand for the current fiscal year. “The outlook is extremely hard to foresee now,” Chairman Tsuneo Murata said.IDC’s analysis found Apple Inc. iPhones mostly unchanged at close to 37 million shipments, showing greater resilience than top smartphone vendor Samsung Electronics Co., whose output fell from just under 72 million to about 58 million shipments in the quarter. Huawei Technologies Co., with the added pressure of U.S. sanctions and scrutiny, dropped by roughly 10 million units in the quarter, landing near 49 million.Xiaomi Corp. achieved a record 10% market share, according to both market research groups, and managed to increase its shipments, by IDC’s estimation. “Xiaomi is dominating the huge India market at the moment and this is giving the company a big boost in smartphone shipments,” said Linda Sui of Strategy Analytics.Looking forward, IDC expects consumer demand to remain suppressed through the rest of the year, with the global economic downturn preventing any year-on-year growth until at least the fourth quarter.(Updates with chart of historic shipments volume)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Chinese smartphone sales plummeted by an unprecedented 22% during the first quarter after the Covid-19 outbreak forced brands from Apple Inc. to Xiaomi Corp. to shut stores and created nationwide supply bottlenecks, according to Counterpoint Research.Huawei Technologies Co. was the only major name to grow sales in the first three months, by 6% to 28.7 million phones -- more than No. 2 and No. 3 brands Vivo and Oppo, combined. Xiaomi’s unit sales plunged 35%, worst among the top five, Counterpoint said. Apple’s iPhone sales dipped about 1%, the consultancy estimated after tracking sell-through volume, a figure closer to units actually bought by consumers rather than shipped or produced.The pandemic has gutted the global smartphone market, stoking uncertainty across a tech industry that supplies components for mobile devices from memory chips to displays and processors. On Wednesday, Samsung Electronics Co. warned of a profit decline this quarter, stemming in large part from a dismal outlook for the mobile device arena.The domestic outlook remains uncertain. Smartphone vendors with extensive retail networks such as Apple and Xiaomi began reopening stores in February and March, but consumer spending is volatile after China’s historic economic contraction. Counterpoint noted that roughly half of smartphones was sold online through online marketplaces such as JD.com and Alibaba in the first quarter. In a sign of potentially stronger longer-term demand, sales of faster fifth-generation or 5G phones more than doubled during the period.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- For years, technologists have been talking about smarter cars packed with sensors, chips and supercomputers that can replace human drivers.That was enough to get investors excited about the future of automotive semiconductors. An earnings report from NXP Semiconductors NV late Monday reminds us of one slight flaw in the plan: People need to actually buy cars.The Dutch company said revenue will drop approximately 20% this quarter to around $1.8 billion. The figure is in line with estimates that analysts slashed by 23% over the past eight weeks. NXP cut its first-quarter revenue estimate at the start of March, only to fall short of that mark. The company forecast a second-quarter operating loss of as much as $237 million, versus an estimated deficit of $169 million.So far this year, much of the attention in semiconductors has been on whether smartphones are a necessity — Xiaomi Corp. thinks so, I disagree — and whether work-from-home and streaming demand will drive server sales enough to make up for the drop in consumer spending. The outlook from Taiwan Semiconductor Manufacturing Co. suggests otherwise.NXP, however, is playing in a different arena: It got 47% of its revenue from automotive clients last year. The company said Monday that it was “navigating a challenging and very fluid environment.” That’s an understatement. After a 4.5% decline in global automobile shipments in 2018 and a 3.9% drop last year, hopes that the industry might avoid a third year of contraction are out the window as the Covid-19 pandemic hits demand and supply.NXP isn’t alone. Germany’s Infineon Technologies AG gets 43% of its revenue from the auto sector. This month, the company completed its $9.3 billion(1) acquisition of California’s Cypress Semiconductor Corp. You’ll never guess which sector accounts for 39% of that company’s business. Forgive Infineon shareholders if they start to feel that the 47% premium they paid for Cypress might be a little steep. Ironically, shareholders seem to be forgiving management, with the stock rebounding from a mid-March low to be 30% off its February peak, and back to where it was in early October.Bloomberg Intelligence senior analyst Anand Srinivasan has been ahead of the curve. He predicted two weeks ago that the then-consensus estimate for a 4% decline in NXP revenue this year was conservative, and that 6% might be more realistic. Today, data on the Bloomberg terminal points to a 10% drop, the worst since the financial crisis in 2009.At Infineon, analysts are looking at a 7% drop in sales for the year ending Sept. 30. That may also be conservative.Xiaomi may believe that smartphones are a must-have, and Apple Inc. certainly hopes that its new iPhone SE will find favor even among tight-fisted consumers. But with a global recession on the way, you’d have to be Elon Musk to believe that the auto sector, and the chipmakers that supply them, are going to survive with only minor bruising.(1) Equity plus debt in an all-cash dealThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
With the global economy in a recession and China-U.S. tensions at all-time highs, now is not a good time to be exposed to higher-end smartphones. As a result, investors should sell Qualcomm (NASDAQ:QCOM) before Qualcomm stock follows Apple down.Source: jejim / Shutterstock.com In a column published on Mar. 13, I contended that "Apple (NASDAQ:AAPL) is likely to be hit hard by a recession." I added that, given the high cost of iPhones, "I would hypothesize that iPhone sales and, consequently, Apple's results, would drop tremendously during the next recession."About a month later, Goldman Sachs reached a similar conclusion. Saying that the economic downturn would hurt iPhone sales, the firm downgraded Apple stock to "sell," Goldman estimated that iPhone sales would tumble 36% year-over-year in the second quarter.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThat's very bad news for Qualcomm, which makes chips for the iPhone and other smartphones. In the first quarter of this year, its chip business generated $3.6 billion of its $5.1 billion of revenue. * 7 of the Best Large-Cap Stocks to Buy Now Further, the Wall Street Journal reported in February that Qualcomm was making more money from expensive 5G phones than from less costly devices. Similarly, the company said in February that 5G devices were pushing its average selling prices higher.As the recession takes hold around the world, sales of such devices will likely drop sharply.So it wasn't surprising that Goldman also cut its rating on QCOM stock to "sell" from "neutral," saying that weak smartphone sales would hurt its chip business as well as its licensing revenue. The chip and licensing businesses together in Q1 accounted for nearly all of the company's revenue.Indeed, given the weaker than expected demand for 5G devices made by Apple, Samsung, and other suppliers, the company's Q2 top and bottom lines are likely to come in below analysts' average outlook. As a result, QCOM stock will likely decline.Already in February, Quacomm predicted that it would sell 10 million to 30 million fewer chips and modems this year than it had in 2019. TheStreet blamed the decline on increased competition from Taiwan-based MediaTek. But whatever the reason, the recession is only going to make the situation worse for Qualcomm and those who own QCOM stock. U.S.-China Tensions Could Hurt Qualcomm StockIn my March column on Apple, I noted tha many media outlets have reported that iPhone sales in China (had) dropped sharply. For example, "a Chinese research firm estimated that iPhone sales had plunged 61% year-over-year in February," I reported.Noting that Beijing had sought to blame the U.S. for the coronavirus outbreak, I suggested that anti-American sentiment, in addition to the epidemic, had likely contributed to weak iPhone demand in China.Since my previous column was published, the tension between the U.S. and China has greatly increased, as President Donald Trump and other Republicans have much more vocally accused Beijing of negligently handling the epidemic.That anti-American sentiment may reduce Qualcomm's revenue not only from Apple, but from Chinese smartphone makers as well.Given the intense tensions between the U.S. and China, Chinese smartphone makers like Huawei, Oppo, Lenovo (OTC:LNVGY), and Xiaomi (OTC:XIACF) may be reluctant to incorporate Qualcomm's chips into their devices. Since Chinese smartphone makers now control the lion's share of the Asian nation's market, that would be a really big deal for Qualcomm and QCOM stock. The Bottom Line on QCOM StockThe recession and anti-American sentiment among China's citizens are likely to put a great deal of pressure on Qualcomm's results going forward. Yet the shares have only dropped 18% this year.Further, the stock is trading at a price/earnings ratio of 20 and a price/sales ratio of nearly four. Those ratios are not very low at all. Consequently, I recommend that investors sell their shares.Larry Ramer has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel's largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer. As of this writing, he did not own any of the aforementioned securities. More From InvestorPlace * America's 1 Stock Picker Reveals Next 1,000% Winner * 25 Stocks You Should Sell Immediately * 1 Under-the-Radar 5G Stock to Buy Now * The 1 Stock All Retirees Must Own The post There Are Plenty of Hard Times Ahead for Qualcomm Stock appeared first on InvestorPlace.
(Bloomberg Opinion) -- Taiwan Semiconductor Manufacturing Co. just posted net income that beat estimates, showed fatter margins, and forecast revenue surpassing expectations. Pretty impressive in a world where the Covid-19 pandemic is hitting economies and industries from all sides.But that’s the end of the good news. The maker of chips for Apple Inc., Qualcomm Inc., Huawei Technologies Co., and almost everyone else, also provided a series of bullet points to investors that should make the whole sector worry.Let’s compare the outlook from three months ago to what the company told investors Thursday afternoon.Then: Global semiconductor industry would climb 8%.(1) Now: “Flat to a slight decline.” Then: The made-to-order foundry industry, which acts as a proxy for chip designers, would climb 17%. Now: Possibly half that, in the order of “high single digit to low teens” percentage. Then: TSMC’s own growth would rise more than 20%.(2) Now: “Mid-high teen” growth.An important caveat to this revised outlook, which might be considered rosy given current uncertainties, is that it’s based on the pandemic stabilizing in June. Let’s hope we’re that lucky. Even in some places that have shown success in battling the disease, such as Singapore and South Korea, new cases continue to mount. Outbreaks could recur until a vaccine is found and widely deployed.Economically, many companies continue to believe things are better than they really are. In China, for example, some executives in the tech sector seem to think that they’re immune from the financial malaise that’s playing out in the rest of the world. It will catch up with them.TSMC hasn’t abandoned all hope, at least in the long term. It maintained its previous guidance for capital expenditure this year of as much as $16 billion, based on the belief that industry trends like the rollout of 5G networks and handsets in coming years will still justify its investment in new equipment.Much of this view comes down to an educated guess. But TSMC’s extensive client list and years of experience riding economic cycles make its predictive power better than almost anyone else.ASML Holding NV, a TSMC supplier and one of the world’s biggest makers of chip equipment, didn’t even dare Wednesday to predict what its revenue might be this quarter or year. Halfway through last quarter, Apple threw out its previous guidance and didn’t take a shot at a new one. Chief Executive Officer C.C. Wei made clear that the new outlook was based on TSMC’s own read of the end-market for devices, not on any indication that its semiconductor clients were cutting orders. That’s an oblique way of saying that customers haven’t reduced purchases yet, but they probably will. The task now is for global technology companies such as Apple, Qualcomm, Nvidia Corp., Xiaomi Corp. and Huawei to adjust to the new reality. Some haven’t: Xiaomi last month predicted that smartphones are a necessity and demand would rebound quickly. Heading into earnings season, investors ought to examine how executives handle this crisis through the same lens that we assess political leadership. As with the epidemic itself, those who are the quickest to face reality and work to mitigate the impact will stand the best chance of getting through it unscathed. The deniers may not be so fortunate.(1) This figure excludes the memory-chip sector, which is calculated separately.(2) TSMC had forecast "several percentage points" higher then the foundry sector.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
InvestorPlace's Brad Moon wrote an excellent piece on April 7 about why Apple (NASDAQ:AAPL) hasn't put more effort into its Home Pod smart speaker. And if you own Apple stock, that's something to be happy about. Let me explain Source: pio3 / Shutterstock.com Focus on What WorksMy colleague's article pointed out that Apple's Home Pod sales reached 2.6 million units in the fourth quarter due to a $100 price cut by retailers to $199. That's a significantly lower retail selling price than either the Apple Watch Series 5 ($399 and higher) or the AirPods Pro ($249).According to MacRumors, Apple's share of the global smart speaker market at the end of Q4 2019, was 4.7%, putting it well down the list in sixth spot. Sure, it gained 60 basis points of market share over Q4 2018, but the next three companies, Xiaomi (OTCMKTS:XIACY), Alibaba (NYSE:BABA) and Baidu (NASDAQ:BIDU), gained 390, 250 and 490 basis points respectively. InvestorPlace - Stock Market News, Stock Advice & Trading TipsWhile Apple was taking market share from Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), the 3rd, 4th, and 5th-placed companies were taking more. * 7 Bank Stocks to Watch as Earnings Season Heats Up It would be one thing to double down if it were getting $499 a speaker, but it's not. So either Apple's innovation department comes up with something for the Home Pod in the future that is so wonderfully innovative that it can boost the price to deliver Apple's typical margins, or the company can focus its energies where the return is higher.As Brad said, AirPods generated $6 billion of revenue in fiscal 2019 and are expected to bring in $15 billion in 2020. As for the Apple Watch, based on 30.7 million smartwatches sold in 2019, it brought in an estimated $12 billion. I'm sure that despite the coronavirus, its smartwatch sales will continue to do just fine in 2020.Two things that could put some air under Home Pod's growth could include enabling the speaker to play music from other third-party music services. Apple could also introduce a lower-end version to compete with the Amazon Echo and Google Home.But Apple's never been keen to widen its ecosystem, so why start now? As for a lower-end version, it might sell additional units, but it would do so at the expense of margins. The fact that Apple had $207 billion in cash on its balance sheet at the start of December means it doesn't have to lower itself to the competition. It can afford to wait for its R&D team to come up with an innovation that makes the Home Pod different. In the meantime, it can focus on continuing to grow those products and services that are delivering more immediate returns. Like a very talented sports team, the Home Pod is just going to have to wait its turn to get into the game. And that's a very good thing if you own Apple stock. The Bottom Line on Apple StockDuring the coronavirus, I think a good place for Apple to focus its attention is on its e-commerce business. After all, with its retail stores closed, its website has become the face of the company. At some point, another virus will shut down retail for a while. The lessons it learns from this crisis should help it to keep growing its e-commerce business, removing some of the pressure that's on its retail stores.In 2020, Apple's e-commerce business will generate 3.7% of all U.S. retail e-commerce sales, good for fourth place behind only eBay (NASDAQ:EBAY), Walmart (NYSE:WMT) and Amazon. That's $25.7 billion in sales from its online business, yet it accounts for less than 4% of the country's $695 billion in annual total e-commerce revenue.It can do better. Focusing on the Home Pod at this point would be a poor allocation of company resources. Until the Home Pod can prove it's ready to push one of its other products or services aside, it ought to remain on the bench. Will Ashworth has written about investments full-time since 2008. Publications where he's appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * America's 1 Stock Picker Reveals Next 1,000% Winner * 25 Stocks You Should Sell Immediately * 1 Under-the-Radar 5G Stock to Buy Now * The 1 Stock All Retirees Must Own The post Slow Growth of Home Pod Is Good News for Apple Stock appeared first on InvestorPlace.