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Attempt to link Foxconn's slowed growth to Apple viewed as questionable theory

post #1 of 57
Thread Starter 
A suggestion that slow growth at manufacturer Foxconn could be a bad sign for Apple has been called out by one financial institution, which instead asserts that the connection between the two companies is limited.

Analyst Yair Reiner with Oppenheimer & Co. issued a note on Wednesday in reaction to an analysis released earlier in the day by a separate firm. That previous take downgraded AAPL stock over concerns that a deceleration in manufacturing at overseas device assembler Foxconn could be a bad sign for Apple.

Reiner said the conclusion reached by analyst Alex Gauna of JMP Securities might appear to carry weight at first, because Foxconn and Apple both accelerated in growth together. But with a closer look, Reiner feels the connection between Foxconn and Apple is not supported.

"Apple's contribution to Han Hai (which uses the trade name Foxconn) is limited," Reiner wrote. "The correlation between Apple and Hon Hai's revenue therefore appears to be a product of coincidence more than causality."

To support his theory, Reiner noted that Apple's contribution to Foxconn's $93.4 billion in sales in 2010 was about $20 billion, or just 21 percent of the company's total. Because Apple accounts for a "relatively modest portion" of Foxconn's revenue, the Cupertino, Calif., company is not seen as directly tied to Foxconn's momentum.

He also noted that assemblers like Foxconn are typically paid on a cost-plus basis, where the assembler purchases most of the components that will be used to build the final device, like an iPhone or iPad. A company like Apple then pays reimbursement for the purchased components, plus a single-digit margin for assembly services.

Reiner estimates that about 65 percent of Apple's $30 billion in "cost of goods" in 2010 went to Foxconn, while the rest went to component companies selling directly to Apple. Foxconn does not disclose revenue contributions from its customers.

Gauna and JMP Securities gained a considerable amount of attention Wednesday with their decision to downgrade AAPL stock. With a consistently strong performance and sales consistently exceeding expectations, it is one of the most generally supported stocks on Wall Street.
post #2 of 57
What? I would call one customer bringing in 21% of your total revenue more than "relatively modest." Apple has to be their largest customer, unless Foxconn has like 5 total customers.
post #3 of 57
Third Friday of the month is coming up.

Gotta start spreading 'em rumors for the sake of triggering options.
post #4 of 57
Right on!
post #5 of 57
The fact that other brands may have a decreased need of foxconn's resources, in fact FREES production capacity for Apple, something which comes in handy given the expected iPad2 boom.

Oh well, the current dip will only make the upswing bigger. Unfortunately it isn't the guys who play it nicely who will be benefiting most.
post #6 of 57
Quote:
Originally Posted by JimDreamworx View Post

Third Friday of the month is coming up.

Gotta start spreading 'em rumors for the sake of triggering options.

I think that's less of an issue now that weekly options are available. The monthly options expiration date isn't any more significant than any other Friday now (at least for AAPL).
post #7 of 57
Twenty-one percent is a huge number relative to total income. When I buy groceries at the store it is a small percentage of income to them. If I were responsible for one fifth of the income of a store you can bet the owner would meet me at the door and have people collecting the items I want while I sat and had coffee with the owner.

That doesn't mean that the income of Foxcon slowing equates to the income of Apple slowing.
post #8 of 57
I think this may be an attempt to lower apple stocks so they can pick up some cheap shares. However, the Japan situation may cause Apple some problems. Apple has a supply problem. If they can't figure out a way to get Ipads into people's hands fast enough I think people may go to Xoom and these other tabs. They should've made sure they shipped at least 5 million to US stores at the outset.
post #9 of 57
Quote:
Originally Posted by Freshmaker View Post

What? I would call one customer bringing in 21% of your total revenue more than "relatively modest." Apple has to be their largest customer, unless Foxconn has like 5 total customers.

I think this analyst point about Apple accounting for a "modest" 21 percent is not to downplay how much revenue that is for Fox Con. It' more about refuting the notion that a drop in Fox Con's revenue automatically means it is because of Apple.
Crying? No, I am not crying. I am sweating through my eyes.
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Crying? No, I am not crying. I am sweating through my eyes.
Reply
post #10 of 57
First Story:
Deceleration in Foxconn manufacturing seen as a concern for Apple
by Neil Hughes

Same day (a separate article???)
Attempt to link Foxconn's slowed growth to Apple viewed as questionable
by Neil Hughes

Maybe if he reads other analysts, he will also post them as separate articles. Even Jenna Wortham of NYT, who tend to simply borrow words and analysis from others woould take the time to consolidate related issues, and simply modify the original article. However, milking the same story into multiple articles is understandable if Apple Insider is paying its freelancer by the number of articles published without so much as editorial screening.

But, it would not be surprising from Neil Hughes who simply regurgitates other articles from other sites:

Up to 20% of original iPad buyers predicted to upgrade to Apple's iPad 2
By Neil Hughes

while another article also by (another Apple Insider))

Apple attracts 70% new buyers with iPad 2 launch - survey


without each article questioning the statistical sampling and thus validity of the analysis.

Add Sam Oliver

IDC: Apple's iPad took 83% share of tablets shipped in 2010

and Apple Insider is the "epitome" of what would represent as online tech news.


CGC
post #11 of 57
Quote:
Originally Posted by Smallwheels View Post

Twenty-one percent is a huge number relative to total income. When I buy groceries at the store it is a small percentage of income to them. If I were responsible for one fifth of the income of a store you can bet the owner would meet me at the door and have people collecting the items I want while I sat and had coffee with the owner.

That doesn't mean that the income of Foxcon slowing equates to the income of Apple slowing.

Sure, it probably doesn't mean anything, but as you can see, investors believed the vague connection. Apple investors are scared to hold on to Apple shares because they don't trust the stock one bit. You look at it rationally, but Apple shareholders are skittish and scared of losing their money with Apple so they dump shares quickly. \
post #12 of 57
Quote:
Originally Posted by Constable Odo View Post

Sure, it probably doesn't mean anything, but as you can see, investors believed the vague connection. Apple investors are scared to hold on to Apple shares because they don't trust the stock one bit. You look at it rationally, but Apple shareholders are skittish and scared of losing their money with Apple so they dump shares quickly. \

Probably because they bought at over 300, and there's a long way to fall if something goes wrong at apple.
post #13 of 57
So, uh, none of you lot actually own enough AAPL or FXCNY to track what really is happening with either firm, eh?

FoxConn is moving through the process of picking up a Chinese government subsidy and other perks to build additional facilities in western China and hire another 200,000 employees.

Yup - sounds really slow.
post #14 of 57
I don't think anyone with half a brain would be so dumb as to buy MMI's tablet just because Apple is sold out. The reason they're sold out is because knowledgeable users KNOW that the iPad2 is superior and they'll wait for it.
post #15 of 57
Quote:
Originally Posted by cgc0202 View Post

Maybe if he reads other analysts, he will also post them as separate articles. Even Jenna Wortham of NYT, who tend to simply borrow words and analysis from others woould take the time to consolidate related issues, and simply modify the original article. However, milking the same story into multiple articles is understandable if Apple Insider is paying its freelancer by the number of articles published without so much as editorial screening.

Normally I'd agree, but don't you think there is a chance that this second analysis was available only after the first story was posted? After all, about 7 hours passed between articles.
post #16 of 57
This has been a great opportunity for large institutions to pay speculators to drive down stocks so they can come in and buy larger chunks.
post #17 of 57
Ludacris!!!!
post #18 of 57
Quote:
Originally Posted by AdonisSMU View Post

I think this may be an attempt to lower apple stocks so they can pick up some cheap shares. However, the Japan situation may cause Apple some problems. Apple has a supply problem. If they can't figure out a way to get Ipads into people's hands fast enough I think people may go to Xoom and these other tabs. They should've made sure they shipped at least 5 million to US stores at the outset.

That is absolute BS!
Nobody is going to head for a freaking Xoom tablet over and ipad 2. Sorry for sounding so pompous but that is how I feel.
Moto doesn't have the ecosystem like Apple nor the customer service. Going into an Apple store is like entering a weekend jam session with the Beatles.
post #19 of 57
Quote:
Originally Posted by JeffDM View Post

Normally I'd agree, but don't you think there is a chance that this second analysis was available only after the first story was posted? After all, about 7 hours passed between articles.

More professional online tech blog sites, like the New York Times, would simply edit the original post, especially so it if was from the same writer. On the other hand, click counter sensitive sites, have a tendency to "milk" the same issue. This would not be surprising if it is from different writers.

More important, since this is really a blog, and not really news because it is secondary if not tertiary material (from other sites), it would have been appropriate for the writer to consider the flaws of the original article. Such would have made the "second" article more worthy, but it should still have been consolidated, or the second placed as an update. Afterall, based from prior articles, it was not unusual for Apple Insider to edit article content, to correct glaring errors. This means that the writers or editors can modify already published articles.

CGC
post #20 of 57
That analyst got himself a PR 15 seconds of Fame! Some might even see him as a Truth Teller, Independent Thinker! Meanwhile analysts like that can't lose:

They are "protecting" us... But those who will BUY on Sell Off's like today, they'll be Thanking Analysts like that guy, who, on half truths, if not lies, got his name into headlines, to re-enforce his own job security!

Don't you remember, a week or so before iPad 2 Announcement, there were rumors of Apple problems with supplies etc... Yep, with Apple having a hard time keeping up with the Demand, such Supplies Issue, is not "Supplies" ( SURPRISE misspelled... borrowed from an old joke I can't remember... )

In this article, I've found more support for the points in my post on a previous AI thread, http://bit.ly/gp7vLB "Foxconn - Stealing from Apple?! Ha ha ha!!!!

"assemblers like Foxconn are typically paid on a cost-plus basis, where the assembler purchases most of the components that will be used to build the final device, like an iPhone or iPad. A company like Apple then pays reimbursement for the purchased components, plus a single-digit margin for assembly services"

Thus, it'll be hard to steal from Apple...

Also, not long ago I couldn't believe that AAPL went above $300! And today the Sky Is Falling, Bad Day at $326-330???

I am going out for a walk!

If you need more ammunition against Apple doubters, here is a great video:

iPad 2 & The Future of Tablets! Mossberg, Carr, Charlie Rose! http://bit.ly/hBGbQQ LISTEN CLOSELY!!!! Forward that link...

Go out for a walk! The Sky is NOT Falling!!!

Go  Apple!!!

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Go  Apple!!!

Reply
post #21 of 57
Quote:
Originally Posted by mdriftmeyer View Post

This has been a great opportunity for large institutions to pay speculators to drive down stocks so they can come in and buy larger chunks.

Well, they achieved their purpose. The general market is down by about 2%, Apple is down 4%.
post #22 of 57
Quote:
Originally Posted by maccherry View Post

That is absolute BS!
Nobody is going to head for a freaking Xoom tablet over and ipad 2. Sorry for sounding so pompous but that is how I feel.
Moto doesn't have the ecosystem like Apple nor the customer service. Going into an Apple store is like entering a weekend jam session with the Beatles.

LOL! I thought the Apple Store was more like entering a Hare Krishna Temple. Actually made me uncomfortable. It seemed like someone spiked their juice with MDMA. I ended up getting 2 32GB models and sold them over the weekend unopened.

I agree that the Android tablet market needs to mature some more. I'm personally tired of iOS and traded in my iPhone (after 4yrs of iPhones) over the holidays. I like to try new things. After looking at my iPhone for years I like having something new to tinker with. Had no problem replacing all my iPhone apps since most app stores have all the same Core apps + thousands of useless ones. Apples slick marketing has never cemented me into the brand. Its just another OS and similar computer hardware in a well designed box. I guess I just like to taste all that technology has to offer. Tablets just aren't on the menu yet for me.
post #23 of 57
Yeah, that's true. AAPL is taaaaaaanking today. Gah. Not worried though. I can't wait to see the Q1 results!
post #24 of 57
First, Foxcomm/Hon Hai is the largest EMS company in the world trailed by Quanta in second place. Foxconn has Apple, Dell, HP/Compaq, IBM, Intel, Cisco, Korn Corp. and Motorola Inc. as major customers. While Apple's part of the Foxconn deliverables pie is significant, it is not where to point to account for the flattening of their growth. Likely it can be attributed to cyclical or other responses to market pressures - like the iPad impact to the PC sector for Dell and HP, for example.

Apple investors are anything BUT skittish - judging from the number who have held stock from the dark ages of Apple until now. Day traders and hedge fund managers may be more concerned, but not rank and file Apple investors. Recall also that Foxconn revenues are going to be impacted by their building of the new larger facility in northern China - perhaps this analyst misplaced that fact from a while back.

Finally and most tellingly directly from the fingers of Neil himself:
Quote:
Gauna and JMP Securities gained a considerable amount of attention Wednesday with their decision to downgrade AAPL stock.

It never seems to fail, as soon as popularity of an Apple device is demonstrated there is a chorus of nay-sayers driving page hits to their sites by making adverse pronouncements. This is no different. Guana is not so cleverly or originally collecting pages hits by doing this for his company. Anyone worth any sort of mention as being market savvy can see through this sort of thing and understand it for what it is. The rest of the calumny falls on the idiots who knee-jerk constantly to this sort of post-release activity and wail about the sky falling on Apple. That day will come, as it does for all companies but to borrow from the LOTR:
Quote:
A day may come when the courage of men fails, when we forsake our friends and break all bonds of fellowship, but it is not this day. An hour of woes and shattered shields, when the age of men comes crashing down! But it is not this day! This day we fight! By all that you hold dear on this good Earth, I bid you *stand, Men of the West!*
If you are going to insist on being an ass, at least demonstrate the intelligence to be a smart one
Reply
If you are going to insist on being an ass, at least demonstrate the intelligence to be a smart one
Reply
post #25 of 57
Quote:
Originally Posted by kyle172 View Post

Ludacris!!!!

Yes?
post #26 of 57
Quote:
Originally Posted by maccherry View Post

That is absolute BS!
Nobody is going to head for a freaking Xoom tablet over and ipad 2. Sorry for sounding so pompous but that is how I feel.
Moto doesn't have the ecosystem like Apple nor the customer service. Going into an Apple store is like entering a weekend jam session with the Beatles.

Agreed, most will just wait. Assuming there is a major slow down which is still not certain. The Japan news now this ... seems to me like a touch of deliberate FUD for stock manipulation to me. Awesome buying time for AAPL IMHO.
Been using Apple since Apple ][ - Long on AAPL so biased
nMac Pro 6 Core, MacBookPro i7, MacBookPro i5, iPhones 5 and 5s, iPad Air, 2013 Mac mini, SE30, IIFx, Towers; G4 & G3.
Reply
Been using Apple since Apple ][ - Long on AAPL so biased
nMac Pro 6 Core, MacBookPro i7, MacBookPro i5, iPhones 5 and 5s, iPad Air, 2013 Mac mini, SE30, IIFx, Towers; G4 & G3.
Reply
post #27 of 57
Quote:
Originally Posted by RMBootneck View Post

I don't think anyone with half a brain would be so dumb as to buy MMI's tablet just because Apple is sold out. The reason they're sold out is because knowledgeable users KNOW that the iPad2 is superior and they'll wait for it.

I was being sarcastic.
post #28 of 57
Quote:
Originally Posted by Andykemp View Post

LOL! I thought the Apple Store was more like entering a Hare Krishna Temple. Actually made me uncomfortable. It seemed like someone spiked their juice with MDMA. I ended up getting 2 32GB models and sold them over the weekend unopened.

I agree that the Android tablet market needs to mature some more. I'm personally tired of iOS and traded in my iPhone (after 4yrs of iPhones) over the holidays. I like to try new things. After looking at my iPhone for years I like having something new to tinker with. Had no problem replacing all my iPhone apps since most app stores have all the same Core apps + thousands of useless ones. Apples slick marketing has never cemented me into the brand. Its just another OS and similar computer hardware in a well designed box. I guess I just like to taste all that technology has to offer. Tablets just aren't on the menu yet for me.

Enjoy the Android blogs. Shut the door on the way out.
Been using Apple since Apple ][ - Long on AAPL so biased
nMac Pro 6 Core, MacBookPro i7, MacBookPro i5, iPhones 5 and 5s, iPad Air, 2013 Mac mini, SE30, IIFx, Towers; G4 & G3.
Reply
Been using Apple since Apple ][ - Long on AAPL so biased
nMac Pro 6 Core, MacBookPro i7, MacBookPro i5, iPhones 5 and 5s, iPad Air, 2013 Mac mini, SE30, IIFx, Towers; G4 & G3.
Reply
post #29 of 57
Quote:
Originally Posted by kyle172 View Post

Ludacris!!!!

50 Cent!!!!
Oh wait.....
Crying? No, I am not crying. I am sweating through my eyes.
Reply
Crying? No, I am not crying. I am sweating through my eyes.
Reply
post #30 of 57
The best part of this analysis is when the analyst mentions that this has nothing to do with how Apple is doing in the marketplace. Just a circumspect insight on one of their suppliers.
post #31 of 57
Quote:
Originally Posted by digitalclips View Post

Enjoy the Android blogs. Shut the door on the way out.

I own devices on both platforms. And actually the Android blogs and forums are much more tolerable. Less finger pointing and platform trash talk.
post #32 of 57
deleted
post #33 of 57
if you're such a great analyst, why aren't you keeping your stock predictions to yourself and just make tons of money playing the market?

(Unless stock manipulation is your real game. . . )
post #34 of 57
Quote:
Originally Posted by Andykemp View Post

After looking at my iPhone for years I like having something new to tinker with.

Well then you and Android are a match made in heaven. Congratulations! Let us know when there's a bun in the oven. :-)
post #35 of 57
Quote:
Originally Posted by tundraboy View Post

Well then you and Android are a match made in heaven. Congratulations! Let us know when there's a bun in the oven. :-)

I'm actually baking blueberry muffins in the kitchen right now.
post #36 of 57
Quote:
Originally Posted by JimDreamworx View Post

Third Friday of the month is coming up.

Gotta start spreading 'em rumors for the sake of triggering options.

There's panic selling going on in the market anyway over oil and Japan nukes. Why not take down AAPL with it?
post #37 of 57
Hello? That story likely had NOTHING to do with Apple's stock losing value today. The whole market was way down today on fears over Japan. If the market was up, and Apple's stock went down, then'd I see some correlation.

Google for example was down over twelve dollars a share as well.

For what it is worth, the Japan situation might be a temporary set back for Apple. However, in the long run it will help Apple. Lots of Apple product was likely destroyed. People will want to replace it.

Further, true investors don't let the market's daily fluctuations sway them. Apple's fundamentals are solid. That hasn't changed. Warren Buffet once said you buy when people are running, and sell when they are buying.

Quote:
Originally Posted by Constable Odo View Post

Sure, it probably doesn't mean anything, but as you can see, investors believed the vague connection. Apple investors are scared to hold on to Apple shares because they don't trust the stock one bit. You look at it rationally, but Apple shareholders are skittish and scared of losing their money with Apple so they dump shares quickly. \
post #38 of 57
Quote:
Originally Posted by AdonisSMU View Post

I think this may be an attempt to lower apple stocks so they can pick up some cheap shares. However, the Japan situation may cause Apple some problems. Apple has a supply problem. If they can't figure out a way to get Ipads into people's hands fast enough I think people may go to Xoom and these other tabs. They should've made sure they shipped at least 5 million to US stores at the outset.

Your theory is more nutty than the average no nothing analyst. Maybe you could get a job on Wall Street.
post #39 of 57
Quote:
Originally Posted by mrpoge View Post

I think that's less of an issue now that weekly options are available. The monthly options expiration date isn't any more significant than any other Friday now (at least for AAPL).

So Friday its going to tank again?
post #40 of 57
Quote:
Originally Posted by TBell View Post

Hello? That story likely had NOTHING to do with Apple's stock losing value today. The whole market was way down today on fears over Japan. If the market was up, and Apple's stock went down, then'd I see some correlation.

Google for example was down over twelve dollars a share as well.

For what it is worth, the Japan situation might be a temporary set back for Apple. However, in the long run it will help Apple. Lots of Apple product was likely destroyed. People will want to replace it.

Further, true investors don't let the market's daily fluctuations sway them. Apple's fundamentals are solid. That hasn't changed. Warren Buffet once said you buy when people are running, and sell when they are buying.

I thought the same thing about the stock and the disaster in Japan. Everything is down right now and Apple is delaying the release of the iPad2 over there. Theres been a disruption in the shipping and manufacturing of component supplies from Japan also. Probably a price increase to follow also.
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