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MarketScreener Homepage  >  Equities  >  Stock Exchange of Hong Kong  >  Xiaomi Corp    1810   KYG9830T1067

XIAOMI CORP

(1810)
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Huawei security row overshadows annual telecoms gathering

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02/25/2019 | 03:52am EST
Men stand over a sign at the Mobile World Congress in Barcelona

MADRID (Reuters) - Leading telecoms companies gather in Barcelona this weekend for their main annual trade fair under the shadow of a bitter clash between the United States and China over network security for the next generation of mobile services.

Accusations from U.S. President Donald Trump's administration that Huawei, the world's biggest network equipment maker, has enabled Chinese state espionage have shaken the industry and raised broader fears for progress in talks to defuse a rumbling trade dispute.

Aside from hosting snazzy device launches and officials from more than 2,400 companies, mobile industry trade body GSMA is seeking to ward off a ban on Chinese vendors in European markets.

GSMA Marketing Director Andrew Parker said the association would lobby to protect competition in the supply chain.

"The more choice the industry has, the more supply, the better value everyone will get," Parker said.

"We are going to stick to, and encourage, that line because competition is a good thing for an industry like ours."

Australia and New Zealand have stopped operators using Huawei equipment in their networks, and the European Commission is considering a de facto ban.

European telecoms executives say this could set back plans to roll out advanced "fifth-generation" 5G technology by at least two years. Industry analysts warn that shutting out Chinese vendors could also trigger retaliation from Beijing.

"What it loses in the West, it will win in the East," said Bengt Nordstrom, CEO of Swedish industry consultancy Northstream.

"I would expect severe disruption to the telecoms ecosystem – this for me is very similar to the Lehman Brothers situation in 2008," he added, referring to the Wall Street bank whose collapse triggered the global financial crisis.

U.S. DELEGATION

A delegation of at least eight U.S. officials is expected in Barcelona, two weeks after Secretary of State Mike Pompeo warned Huawei equipment would jeopardize European allies' partnerships with the world's largest economy.

Huawei, an associate member of the GSMA, denies engaging in intelligence work for any government, and its founder has taken to U.S. and British media to emphasize this in recent days.

Any further restriction could spark a race between other network equipment makers to fill the void. Sweden's Ericsson and Nokia of Finland compete with Huawei, while Korea's Samsung Electronics is making a big push into the market.

Some operators fret that, were Huawei to be excluded from the process, Europe would slip behind other countries, especially if firms had to rip out parts of existing networks.

Another fundamental question the industry has yet to answer is whether 5G, which promises to link up everything from vehicles to household devices, will end up being profitable.

"The jury is still out on: is it going to be a consumer player, are there use cases that are going to demand 5G at an economic level that makes sense?" said Sam Evans, a partner at TMT consultancy and investment firm Delta Partners.

But enough testing should now have been done to "start to see at least in the short term if it's viable", Evans added.

FOLDABLE SCREENS

Alongside febrile politics, telecoms firms face the search for revenue growth as their bread-and-butter connectivity becomes ever less profitable.

Carmakers, data analytics firms and online retailers will rub shoulders with operators and unveil partnerships in fields ranging from transport to gaming and even medical surgery.

Applications for the "Internet of Things" – attaching chips that can send and receive data to everyday objects - will include sensors to prevent leaks in municipal water systems and other ways to improve city life.

After a dismal year for smartphones, with sales falling for five consecutive quarters, companies are also trying to reignite consumer interest with upgraded gadgets.

Huawei, which overtook Apple to become the world's second-biggest smartphone seller last year, will show off its latest devices at the congress.

Market leader Samsung unleashed on the world on Wednesday a nearly $2,000 smartphone with 5G connection, the world's first flexible screen and six cameras.

The device "answers skeptics who said that everything that could be done has been done," DJ Koh, chief executive of Samsung Electronics, told a launch event in San Francisco.

(Additional reporting by Douglas Busvine in Frankfurt, and Jack Stubbs and Paul Sandle in London; Editing by Keith Weir)

By Isla Binnie

Stocks mentioned in the article
ChangeLast1st jan.
APPLE INC. 0.58% 268.48 Delayed Quote.71.62%
DEUTSCHE TELEKOM AG -0.88% 14.892 Delayed Quote.1.38%
NORDSTROM, INC 0.31% 39.03 Delayed Quote.-19.42%
ONE STOP SYSTEMS, INC. 0.57% 1.78 Delayed Quote.-8.76%
ORANGE -0.93% 13.335 Real-time Quote.-4.91%
TELEFONICA -0.27% 6.743 End-of-day quote.-7.88%
VODAFONE GROUP PLC -0.78% 142.74 Delayed Quote.-5.91%
XIAOMI CORP End-of-day quote.
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Financials (CNY)
Sales 2019 204 B
EBIT 2019 10 826 M
Net income 2019 9 799 M
Finance 2019 33 283 M
Yield 2019 -
P/E ratio 2019 22,2x
P/E ratio 2020 18,4x
EV / Sales2019 0,91x
EV / Sales2020 0,70x
Capitalization 220 B
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 28
Average target price 9,65  CNY
Last Close Price 9,21  CNY
Spread / Highest target 43,6%
Spread / Average Target 4,82%
Spread / Lowest Target -31,3%
EPS Revisions
Managers
NameTitle
Jun Lei Chairman & Chief Executive Officer
Xiang Wang President
Yan Qi SVP-Internal Operations & Public Affairs
Shou Zi Chew Chief Financial Officer, Executive Director & SVP
Bin Lin Vice Chairman & President-Smartphone Department
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1st jan.Capitalization (M$)
XIAOMI CORP28 398
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FITBIT, INC.35.01%1 746
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