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December 15, 2014

Xiaomi records $56m in net profit

Company co-founder Lei Jun owns 77.8% of the company stake, according to regulatory filing.

By CBR Staff Writer

Xiaomi Technology has recorded $56m in net profit and $4.3bn in revenue last year, showing thin margins for the world’s third-largest smartphone vendor.

According to the company’s regulatory filing, as cited by Reuters, Xiaomi chairman and chief executive Lei Jun owns 77.8% of the company with the rest held by unnamed shareholders.

A spokeswoman for the company confirmed the news, but said that the amount disclosed did not cover the total of Xiaomi’s business.

The company shot to fame by offering hardware at low prices, but at its core Xiaomi asserts that it is an internet company and that the low cost hardware acts as a distribution channel for its software and services.

However, there were questions about Xiaomi’s business model which claimed that the company may not generate sustainable profit in the long term.

Reuters cited Forrester Research analyst Bryan Wang as saying: "They’re growing so fast and so lean, I wouldn’t be surprised even if they were losing money."

"The current market is so competitive that I don’t think it’s sustainable without consolidation."

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Xiaomi has reportedly bought a 1.3% stake of electrical appliance manufacturer Midea Group, and is investing in such companies to expand its ecosystem of internet-connected devices and to go beyond smartphones.

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