China's Xiaomi plans US$1.5 billion buyback to arrest stock tumble

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Chinese smartphone maker Xiaomi Corp announced a HKUS$12 billion (US$1.53 billion) share buyback plan on Tuesday, in a reversal of its ...

SHANGHAI: Chinese smartphone maker Xiaomi Corp announced a HKUS$12 billion share buyback plan on Tuesday, in a reversal of its cash-management strategy that is aimed at boosting its floundering stock.AdvertisementJust last week the company scrapped an already delayed plan to offer equity in China, a move aimed at attracting mainland investors hungry to buy into global companies. The company said then it had enough money and would focus on business development.

The stock has also been hit by losses at the Hong Kong stock market, which has plunged since massive anti-government protests started in the city in June. Companies on the city's exchange have collectively bled US$152 billion in value since June. Xiaomi had cash and cash equivalents of 34.9 billion yuan as of June 30 and total borrowings of 13.8 billion yuan. The company generated positive cash flow of roughly 11 billion yuan in the June quarter.

Xiaomi's current financial resources will enable it to implement the repurchase while maintaining a solid financial position, it said.Growth at the Beijing-based company has slowed sharply as the global smartphone market has shrunk and local competition has increased.

 

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