Foxconn offered $12.6M government subsidy to stem layoffs linked to iPhone 6s order reduction, repo

Posted:
in General Discussion edited January 2016
Piling on to reports of slowing iPhone 6s demand, a report on Tuesday claims the city of Zhengzhou is offering Apple supplier Foxconn a $12.6 million subsidy to keep workers in its plant, a facility thought to be dedicated in large part to iPhone production.




Citing sources with knowledge of Foxconn's operations, The Wall Street Journal links the incentive offer to Apple's supposed decision to cut iPhone 6s orders, saying the Asian manufacturer dismissed workers at its Zhengzhou factory two months early for the Chinese Lunar New Year holiday. Further, the publication said other Chinese iPhone factories were not as busy leading into the 2015 holiday season, normally a time of "rush quantity" production for Apple suppliers.

Apple declined to comment, while Foxconn would not confirm that Zengzhou's offer -- 81.9 million yuan ($12.6 million) earmarked for "unemployment-insurance work-force stabilization subsidy" -- was associated with iPhone production.

"The incentives were provided to Foxconn in recognition of our company's contributions to maintaining our significant work force at our Zhengzhou facility throughout that year," the company said.

Aside from supply chain rumor, hearsay and "best-guess" estimates from analysts, there is little hard evidence to prove iPhone demand is slowing, but investors are skittish that Apple's most important product has peaked. On hearing reports from Apple suppliers, like today's Nikkei report, investment firms like FBR & Co., RBC Capital Markets, J.P. Morgan and Morgan Stanley cut sales estimates for the current March quarter, with some on Wall Street projecting zero or negative year-on-year growth.

Earlier today, PiperJaffray analyst Gene Munster suggested Apple's own guidance was the best barometer for reading iPhone sales estimates going into the new year, adding that production estimates do not always mirror actual results.

Investors will get a better sense of iPhone growth, or lack thereof, when Apple reveals quarterly results for the first fiscal quarter of 2016 on Jan. 26. The company is expected to offer guidance for the coming March quarter at that time.
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Comments

  • Reply 1 of 48
    Well this will be good for another 2% drop tomorrow. Sigh.
  • Reply 2 of 48
    radarthekatradarthekat Posts: 3,395moderator
    This report stinks of contrivance.  How convenient to get news of a government susidy that likely happens to be tied to Foxconn having created tons of jobs in the local area throughout the year, right in the midst of the annual seasonally-driven production cut rumors (which themselves are being perverted to promote the Apple-is-doomed narrative).  Let's link the subsidy to the supposed production cuts and claim it's an effort to keep idle workers on the job.  Any evidence?  This is the Wall St Journal.  When have they ever needed evidence?
    edited January 2016 JamesBBpalomine
  • Reply 3 of 48
    quadra 610quadra 610 Posts: 6,756member
    "Piling on reports"

    "Citing sources"

    Proof??

    WHAT sources? From WHOM? Based on WHAT, exactly?

    Sounds like more nonsense with manipulative undertones.
  • Reply 4 of 48
    This report stinks of contrivance.  How convenient to get news of a government susidy that likely happens to be tied to Foxconn having created tons of jobs in the local area throughout the year, right in the midst of the annual seasonally-driven production cut rumors (which themselves are being perverted to promote the Apple-is-doomed narrative).  Let's link the subsidy to the supposed production cuts and claim it's an effort to keep idle workers on the job.  Any evidence?  This is the Wall St Journal.  When have they ever needed evidence?
    Right. Let's not forget this from January 2013.

    http://www.wsj.com/articles/SB10001424127887324235104578241051730364998

    Apple Cuts Orders for iPhone Parts

    Apple Inc. has cut its component orders for the iPhone 5 because of weaker-than-expected demand, people familiar with the situation said Monday, indicating sales of the latest smartphone haven't been as strong as anticipated.

    Apple's orders for iPhone 5 screens for the first quarter, for example, have dropped to roughly half of what the company had planned to order, the people said.
    edited January 2016 radarthekat
  • Reply 5 of 48
    snovasnova Posts: 1,281member
    so... lets say this is true for a moment... They would be prepaying for unemployment.. just so the workers stay at the factory sitting on their hands?  At least with unemployment, they could be off trying to find a new job. This story seems silly on the surface. 
    palomine
  • Reply 6 of 48
    "Piling on reports"

    "Citing sources"

    Proof??

    WHAT sources? From WHOM? Based on WHAT, exactly?

    Sounds like more nonsense with manipulative undertones.
    Do a Google news search on Apple and every other story is 'Apple cutting iPhone orders...' At this rate I suspect the stock will be in the $80s by the time Apple reports at the end of January. I'm just waiting for the does the board need to replace Tim Cook stories to start surfacing again like they did in 2013.
  • Reply 7 of 48
    foggyhillfoggyhill Posts: 4,767member
    snova said:
    so... lets say this is true for a moment... They would be prepaying for unemployment.. just so the workers stay at the factory sitting on their hands?  At least with unemployment, they could be off trying to find a new job. This story seems silly on the surface. 
    Also, there is a massive push of production in the last 4 months of the year, especially in August to October and orders naturally would fall a lot after that, probably needing 35-50% less staff, so basically this is what happens EVERY YEAR.

    Media, including Appleinsider should be flogged for their low journalistics standards, but who I am kidding, they have no standards to uphold : journalism is mostly dead.
    palomineradarthekatfreerange
  • Reply 8 of 48
    canukstormcanukstorm Posts: 2,534member
    "Piling on reports"

    "Citing sources"

    Proof??

    WHAT sources? From WHOM? Based on WHAT, exactly?

    Sounds like more nonsense with manipulative undertones.
    Do a Google news search on Apple and every other story is 'Apple cutting iPhone orders...' At this rate I suspect the stock will be in the $80s by the time Apple reports at the end of January. I'm just waiting for the does the board need to replace Tim Cook stories to start surfacing again like they did in 2013.
    Hypothetically speaking, let's say if the Board does call to replace Tim Cook. Who are they going to replace him with? 
  • Reply 9 of 48
    Do a Google news search on Apple and every other story is 'Apple cutting iPhone orders...' At this rate I suspect the stock will be in the $80s by the time Apple reports at the end of January. I'm just waiting for the does the board need to replace Tim Cook stories to start surfacing again like they did in 2013.
    Hypothetically speaking, let's say if the Board does call to replace Tim Cook. Who are they going to replace him with? 
    Sure seems like Apple does the exact opposite of what you would expect.  Tim Cook can not respond to every rumor but this is way out of control. I would not be surprised to see some type of preliminary announcement. Maybe that's wishful thinking.  
    palomine
  • Reply 10 of 48
    Do a Google news search on Apple and every other story is 'Apple cutting iPhone orders...' At this rate I suspect the stock will be in the $80s by the time Apple reports at the end of January. I'm just waiting for the does the board need to replace Tim Cook stories to start surfacing again like they did in 2013.
    Hypothetically speaking, let's say if the Board does call to replace Tim Cook. Who are they going to replace him with? 
    No idea but I'm sure media clowns will call for Apple to acquire Tesla and make Elon Musk the CEO.
  • Reply 11 of 48
    Calling sog
  • Reply 12 of 48
    bobschlobbobschlob Posts: 1,074member
    "Piling on reports"

    "Citing sources"

    Proof??

    WHAT sources? From WHOM? Based on WHAT, exactly?

    Sounds like more nonsense with manipulative undertones.
    Do a Google news search on Apple and every other story is 'Apple cutting iPhone orders...' At this rate I suspect the stock will be in the $80s by the time Apple reports at the end of January. I'm just waiting for the does the board need to replace Tim Cook stories to start surfacing again like they did in 2013.
    You're waiting for the replace Tim Cook stories to "start"?
    Where you been?
  • Reply 13 of 48
    fallenjtfallenjt Posts: 4,034member
    LOL, I think Sog's nuts get smaller now and then with these news...I lost only 6-8 grands so far and decide to hold for a long time. So, I don't care much.
  • Reply 14 of 48
    Number 2 smartphone OEM in the world by volume

    Number 1 company in the world by profit

    Let's fire the CEO

    :D
    edited January 2016 quadra 610singularitynetmage
  • Reply 15 of 48
    It is no secret that:
    1. Foxconn has been investing like crazy in robots/automation over the past years (which SHOULD result in layoffs for them) and...
    2. Apple has reduced their dependency on Foxconn as the single assembly supplier and are now increasingly giving Pegatron their share...
    Planted news like this from sources like WSJ and "renowned" analysts are usually a safe contrarian indicator to buy.
    latifbp
  • Reply 16 of 48
    Shares are now trading at a forward PE of 8-9... about the same level it touched in 2013 when we went through the same nonsense (also with the help of WSJ). It may dip another 10%, but it may also correct 40% to 140 and still be very cheap compared to Microsoft, Amazon, Facebook and Google... just change the narrative and it will happen. That's how the street works. Those who control the narrative, controls the price. Accumulate at these levels and hold the stock minimum 2 years.
    latifbp
  • Reply 17 of 48
    ksecksec Posts: 1,567member
    JamesBB said:
    It is no secret that:
    1. Foxconn has been investing like crazy in robots/automation over the past years (which SHOULD result in layoffs for them) and...
    2. Apple has reduced their dependency on Foxconn as the single assembly supplier and are now increasingly giving Pegatron their share...
    Planted news like this from sources like WSJ and "renowned" analysts are usually a safe contrarian indicator to buy.
    Those aren't working just yet. But they are actively testing it. May be for iPhone 7 you could get 30-50%% of the operation by Robots.
  • Reply 18 of 48
    totaltotal Posts: 83member
    first of all, Happy New Year to all! As for Apple, i cant imagine sales would go down 30% suddenly, with all that expansion. I have some stock since 2013, so im still in virtual profit, but ofcourse far away since $130 levels a year ago. If stock will drop under $100 (it will probably happen today) im ready to add more to my portfolio, so no big deal for me, patience is the king. 
    edited January 2016 michael scrip
  • Reply 19 of 48
    totaltotal Posts: 83member
    Pre-market: 100.14 -2.57 (-2.51%), we are almost there smile But i think things will turn around soon. The only "problem" for me is that as non US resident i need to change my currency to US Dollars before buying AAPL, which at current dollar levels is not so attractive, like it was in 2013.
    edited January 2016
  • Reply 20 of 48
    josujosu Posts: 217member
    JamesBB said:
    Shares are now trading at a forward PE of 8-9... about the same level it touched in 2013 when we went through the same nonsense (also with the help of WSJ). It may dip another 10%, but it may also correct 40% to 140 and still be very cheap compared to Microsoft, Amazon, Facebook and Google... just change the narrative and it will happen. That's how the street works. Those who control the narrative, controls the price. Accumulate at these levels and hold the stock minimum 2 years.
    There is another factor in a lower P/E for Apple, not that low, but lower than the other companies you mentioned. All them have big parts of its stock in the hands of their managers/Founders or the board. Is obvious that Bezos, Breen, Page, Zuckerberg or Gates own the companies or at least control a big portion of the shares. But in Apple case virtually 100% of the stock is in the market.
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