TECNO Parent Company Needs To Watch Xiaomi IPO
This is something that may concern Transsion Holdings, the makers of TECNO and Infinix, as it journeys on IPO. Yes, the eccentric Xiaomi is essentially on life support now. Xiaomi was a darling as a private company but is struggling badly in the public board. There is a reason for that: investors do not see how a hardware company can fully differentiate to command great margin in China towards sustaining its long-term viability. That call is universal: if you make devices without a strong platform, your risk is unbounded.
Xiaomi wants a buy back. Smartphone maker Xiaomi, which IPO’d in Hong Kong last year, announced a $1.5 billion stock buyback on Tuesday, sending its shares up 7% that day. The company has cash and cash equivalents of close to $5 billion, so can afford the purchase. However, Xiaomi’s share price has declined nearly a third this year and is at half of its IPO value.
Samsung gets away because it has Samsung Semiconductors. Huawei has a networking gear business that is at its heart.Not many other phone makers can boost of such survival tangential moats.