Xiaomi Corp. is set to pull in revenue of $17 billion to $18 billion this year, ahead of its own target, Reuters reported Friday, citing the company's comments to bankers.
Xiaomi Corp. is set to pull in revenue of $17 billion to $18 billion this year, ahead of its own target, Reuters reported Friday, citing the company’s comments to bankers. That’s impressive, but believable. Xiaomi has had a great year. Xiaomi 2017 net, estimate: $1 billion Stretching the credibility scale, though, are estimates that net income could hit $1 billion. They’re banker projections, Reuters notes, not necessarily Xiaomi’s. The company later confirmed to Bloomberg News that revenue topped $15 billion within the first 10 months of 2017, without commenting on earnings. If those profit numbers are true, it would mean the smartphone and device maker will deliver a net income margin of as much as 5.9 percent. That’s astounding. An operating margin of 5.9 percent would be pretty incredible, but a net margin that high would have Xiaomi well ahead of almost everyone in the market — up with Samsung Electronics Co. and Huawei Technologies Co. Suffice to say, Xiaomi is no Samsung. But bankers desperately want in on Xiaomi’s expected IPO, and talking up the company is a good way to endear themselves. Remember when that real estate agent told you your rundown two bedder was a treasure and guaranteed to fetch a good price? Yeah, it’s like that.
Reuters reports that bankers see Xiaomi’s earnings doubling to $2 billion next year. To get there, Xiaomi would need to dramatically boost revenue and widen margins. That’s hard to do simultaneously, especially in a weakening devices market. But such lofty estimates are helping these bankers talk up a $100 billion share sale, when just two weeks ago the chatter was around a $50 billion listing.
I was skeptical earlier this month about a $50 billion valuation, and I maintain my doubts about this non-devices business Xiaomi keeps trumpeting. Neither Apple Inc. nor Samsung have managed to make a go of the “connected” market. But if people want to believe the tale, I know a jolly bearded fat man in a red suit I can introduce them to.