(Yicai Global) Nov. 24 -- Xiaomi’s shares retreated after China’s biggest smartphone maker reported an 84 percent drop in third-quarter profit from a year earlier following investment losses and slower revenue growth amid tougher competition from rivals such as Apple.

After falling as much as 8.1 percent in Hong Kong earlier today, Xiaomi’s stock price [HKG: 1810] closed down 7 percent at HKD19.26 (USD2.47).

Net profit was CNY788.6 million (USD123.4 million) in the three months ended Sept. 30, versus CNY4.9 billion (USD761.2 million) a year ago, per the Beijing-based firm's earnings report released yesterday. Revenue rose 8.2 percent to CNY78 billion (USD12.2 billion), the slowest increase since the second quarter of last year.

Profit was hit by unrealized losses of CNY3.5 billion from investments made in publicly traded companies, Xiaomi said. Adjusted net profit was CNY5.2 billion, a 25.4 percent gain. Xiaomi had invested in over 360 businesses with a total book value of CNY59.1 billion (USD9.3 billion) as of September, up almost 50 percent from last year.

Revenue from smartphone sales, Xiaomi’s main business, rose 0.5 percent to CNY47.8 billion (USD7.5 billion) in the quarter. Handset shipments fell 5.8 percent to 43.9 million units worldwide amid a global shortfall of key components, while prices rose 6.7 percent to an average CNY1,090 (USD170) per unit.

In terms of global market share, Xiaomi fell back into third place at 13.5 percent, down from 16.7 percent in the second quarter, as Apple retook the No. 2 slot with the launch of the iPhone 13, according to market analyst firm Canalys.

The new iPhone “managed to squeeze all the Android players down in terms of their market share,” Xiaomi Chief Financial Officer Alain Lam said on an earnings conference call.

Research and development expenditure rose almost 40 percent to CNY3.2 billion, from CNY2.3 billion a year ago.

Revenue from Internet of Things and consumer products jumped 5.5 percent to CNY20.9 billion amid rising prices of some components. IoT devices excluding phones, tablets, and laptops connected to the company’s Artificial Intelligence of Things platform exceeded 400 million units as of Sept. 30. Income from internet-based business was CNY7.3 million, up 27 percent, at a quarterly record.

Xiaomi also said its electric vehicle business is going smoothly and it expects to start mass production in the first half of 2024.

Editor: Futura Costaglione