Are Foxconn’s Losses an Omen For Apple’s Second Quarter?
Hon Hai Precision Industry, the parent company of Foxconn — the manufacturing giant most noted for producing the majority of Apple (NASDAQ:AAPL) hardware orders — has announced that it experienced a 19 percent sales decline in its first quarter, which could be foreshadowing of Apple’s second quarter results, as Apple is believed to be responsible for 60 to 70 percent of Foxconn’s business.
At a time when heightening pessimism surrounds Apple’s Q2 results, the news from the manufacturer which dedicates a strong majority of its business to making iDevices such as the iPhone and iPad has put additional doubts in the minds of investors and analysts, although the news is not wholly unexpected: general consensus states that Apple’s anticipated weaker quarter has already been accounted for by investors, who are now looking beyond June and into the second half of the year, which has generated more optimism.
“A quarterly decline was expected, but not a yearly decline,” said KGI Securities analyst Ming-chi Kuo. “This shows that Hon Hai’s revenue depends too much on Apple, and iPhone orders corrected more than expected.”
Foxconn also handles contracts for Hewlett–Packard (NYSE:HPQ) among others, and the world’s largest PC maker has rallied since the beginning of the year, following a more than disappointing 2012. Apple sold 35.1 million iPhones during the second quarter of 2012, dwarfing the sales of Q2 in 2011 (18.65 million) and Q2 2010 (8.75 million), Benzinga said.
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