The latest: Smartphone maker Xiaomi Corp. (1810.HK) reported its revenue fell 4.6% year-on-year in the first quarter to 73.35 billion yuan ($10.9 billion). It also recorded a 530 million yuan net loss for the period, reversing a 7.79 billion yuan net profit a year earlier, according to an announcement on Thursday.

Looking up: The company ranked third in global smartphone shipments in the quarter with 12.6% market share, according to Canalys. Monthly users of its MIUI operating system reached 529 million in global markets and another 135 million in its home mainland China market.

Take Note: The company’s smartphone shipments dropped 22.1% to 38.5 million units during the quarter, hamstrung by continued shortages of key components, disruptions created by the resurgence of the Covid-19 pandemic and global macroeconomic headwinds. That led to an 11.1% decrease in smartphones revenue to 45.8 billion yuan, which was milder than the shipment decline due to an increase in the average selling price of its smartphones.

Digging Deeper: Xiaomi’s revenue in China fell 9% to 35.9 billion yuan in the first quarter and overseas revenue was flat year-on-year, showing its high growth period may be finished as it faces pandemic-related challenges. President Wang Xiang said on a results conference call that the pandemic in China is affecting the company’s production and logistics in the second quarter due to restrictions that have also forced many stores to close. What’s more, a similar outbreak in Hong Kong has affected the company’s ability to ship its phones internationally because the city is an important hub for shipments outside China. Those factors indicate the company could continue to struggle in the second quarter.

Market Reaction: After a 5% plunge on Thursday, Xiaomi rallied with the broader market Friday after the results came out. The stock opened 3.4% higher and closed up 4.9% at HK$11.62 at the midday break. But the shares still trade near their 52-week low.

Translation by Jony Ho

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