Hon Hai Precision Industry Co Ltd., known to the stock trading world as Foxconn, is the main assembler of Apple products including iPhones and iPads. The Taiwanese company reported operating results for the first quarter of 2013 Wednesday, suggesting some softness in results may be in store when Apple reports quarterly results on April 23.
Foxconn’s revenue for the three months ended March 30 was down 19% to T$808.97 billion compared to revenues of T$1 trillion in the comparable quarter of 2012 (approximately 30 Taiwan dollars equal one U. S. dollar). Sequentially, this number is also lower than the sales of T$988.34 billion in the fourth quarter of 2012. Sales always go down after the holiday quarter, but it is the drop in sales from the comparable quarter in 2012 that should be disconcerting for Apple shareholders.
According to Reuters, Hon Hai derives 60% to 70% of revenues from iPhones and iPads. Other estimates are lower and some are as low as 40% of revenues coming from Apple. Hon Hai’s other customers have included Hewlett-Packard,Microsoft, and Sony.
In my analysis, the biggest contributor to the slowing sales at Hon Hai is the slowing sales growth of iPhones. I had expected lower sales due to slowing sales of laptops and gaming consoles but the actual number is lower than what I had expected. More insight should be available when Apple reports its earnings in two weeks. The consensus estimate is for earnings per share of $10.13 on revenues of $42.7 billion.
Today there are strong signs that Apple stock may be close to a bottom. On this bad news out of its Asian supplier, it would not have been unexpected for Apple to dip below its 52-week low of around $419. Instead the stock has rallied and is at $435…Read more at Forbes
