Apple manufacturer Foxconn posts drop in profit with blame unclear

Posted:
in General Discussion edited August 2016
Foxconn continues to post disappointing earnings reports in 2016, with analysts pointing to the decrease in iPhone orders as the prime culprit -- but the actual reason isn't clear, according to the company.




Foxconn's profits for the quarter ending June 30 dropped to NT$17.7 billion ($566 million) from NT$25.7 billion ($822 million) a year ago. While the results fell in the lower range of the company's expectations, analysts were predicting a profit of NT$23.9 billion ($765 million), the Wall Street Journal noted.

Though analysts have blamed the decline on lower iPhone demand and a consequent decrease in orders, the company disagrees. Foxconn chairman Terry Gou linked the situation to a declining PC market, and claimed the company's mobile phone assembly business is stable.

On a month-to-month basis in 2016, Foxconn has posted declining revenue in five of seven months, only eking out growth in February and March, posting 0.22 percent and 0.39 percent expansions respectively. At the peak of the iPhone 6 and iPhone 6 Plus in 2015, Foxconn frequently posted monthly gains between 10 and 20 percent.

The Thursday approval to buyout LCD manufacturer Sharp will potentially put more iPhone components in Foxconn's hands. Gou said in June that in conjunction with the Sharp buy, the company would be able to crank out OLED screens, possibly for use in iPhones in 2017 rather than Sharp's projection of 2018. Additionally, Foxconn is said to be developing an all-glass smartphone casing manufacturing process, which has also been rumored to be in the 2017 iPhone.

The Sharp buyout isn't included in the recent Foxconn earnings report.

Comments

  • Reply 1 of 17
    cnocbuicnocbui Posts: 3,613member
    Samsung poisons Foxconn workers causing quarterly loss.
    singularitytopper24hoursDeelronlatifbp
  • Reply 2 of 17
    Didn't they replace 60,000 factory workers with robots? I am assuming that cost them a good about of money up front for long term saving.
    latifbppatchythepirate
  • Reply 3 of 17
    rogifan_newrogifan_new Posts: 3,668member
    1) they didn't report a quarterly loss 2) you're the only website saying the reason(s) is(are) unclear. Everyone else is attributing it to decline in mobile phone sales. I'm not surprised Foxconn would spin it differently so as to not really panic investors. 
    cnocbuiSpamSandwichbdkennedy1002topper24hours
  • Reply 4 of 17
    Can anyone ever be trusted over there?
    latifbp
  • Reply 5 of 17
    lkrupplkrupp Posts: 6,530member
    Apple is doomed. Apple is not doomed. iPhone sales are tanking. iPhone sales are growing the U.S. and Europe. Foxconn is losing money. Foxconn reported a profit. The Watch is a failure. The Watch is the best selling smartwatch in the world. Tim Cook should be fired. Tim Cook is great CEO, admired by other CEOs. Steve would not have allowed this. Steve would love this. Apple has lost its mojo. Apple is firing on all cylinders. Apple no longer innovates. Here's what Apple's next big thing will be. Ten reasons to dump AAPL. Ten reasons you should buy AAPL. And the money keeps piling up. Get the picture?
    edited August 2016 SpamSandwichlatifbpJanNLbadmonk
  • Reply 6 of 17
    Mike WuertheleMike Wuerthele Posts: 3,858administrator
    Sorry about the headline, too many cooks in the kitchen sometimes.

    Sure, it's about phone assembly sales going down. However, not saying that the CEO of the company is blaming it on PC sales is irresponsible.
    Deelron
  • Reply 7 of 17
    gprovidagprovida Posts: 245member
    Once again, analysts obsessive narrative on iPhone sales had misguided them, even after Foxconn tells them it's PC not mobile that is the problem. Note that may be more than numbers but rather margins as well. The zero to negative margins is painful throughout the supply chain. 
  • Reply 8 of 17
    lkrupplkrupp Posts: 6,530member
    The headline clearly is contrived clickbait as it implies Foxconn lost money in the quarter when it was actually a decline in profits AND was within analyst's estimates. Shame on the Ai editorial staff but maybe we shouldn't expect much from AI anymore. Follow the money and the thirst for clicks overrides integrity. Oh guess what, the headline has been edited. All is forgiven?
    edited August 2016 SpamSandwich
  • Reply 9 of 17
    Mike WuertheleMike Wuerthele Posts: 3,858administrator
    Easy, killer. Mistakes get made sometimes.
    latifbp
  • Reply 10 of 17
    1) they didn't report a quarterly loss 2) you're the only website saying the reason(s) is(are) unclear. Everyone else is attributing it to decline in mobile phone sales. I'm not surprised Foxconn would spin it differently so as to not really panic investors. 

    No, everyone else is attributing it to declining iPhone sales, not mobile phone sales. Which is also clearly wrong since iPhone unit sales were only down 15% while Foxconn profits were down 31%. There's a lot more to blame here than the iPhone.
    latifbp
  • Reply 11 of 17
    melgrossmelgross Posts: 31,255member
    Well, the company is the largest OEM builder in the world. Many major companies have their products built for them, including Hp, Dell, and others. I'm sure that the drop isn't entirely due to Apple, but instead, is due to all of the companies that have seen a drop in sales.
    chiaSpamSandwichbadmonk
  • Reply 12 of 17
    melgrossmelgross Posts: 31,255member
    cnocbui said:
    Samsung poisons Foxconn workers causing quarterly loss.
    That's not really funny.
    badmonk
  • Reply 13 of 17
    "On a month-to-month basis in 2016, Foxconn has posted declining revenue in five of seven months, only eking out growth in February and March, posting 0.22 percent and 0.39 percent expansions respectively. At the peak of the iPhone 6 and iPhone 6 Plus in 2015, Foxconn frequently posted monthly gains between 10 and 20 percent." There is a significant difference in growth rates between Foxconn revenues and iPhone sales -- both in 2015 and 2016 -- which suggests that Foxconn's financial results are not dominated by iPhone. iPhone sales growth exceeded Foxconn's in 2015, while Foxconn growth in 2016 has exceeded iPhone's (to date). This implies that Foxconn's operations are more diversified than many believe. Analysts who predict Apple's future prospects to Foxconn's financial reports are simply lazy.
  • Reply 14 of 17
    maestro64maestro64 Posts: 4,370member

    I guess Foxconn only make profits from one company if you listen to analysis. Foxconn has many different customers and any one of them could be weighing on their decline in profits.

    Typical analysis for you.

  • Reply 15 of 17
    croprcropr Posts: 871member
    1) they didn't report a quarterly loss 2) you're the only website saying the reason(s) is(are) unclear. Everyone else is attributing it to decline in mobile phone sales. I'm not surprised Foxconn would spin it differently so as to not really panic investors. 

    No, everyone else is attributing it to declining iPhone sales, not mobile phone sales. Which is also clearly wrong since iPhone unit sales were only down 15% while Foxconn profits were down 31%. There's a lot more to blame here than the iPhone.
    Every company has fixed costs so the profit is not lineair with the sales.  If sales go down 15% I would not be surprised the profits went down 31%
    singularity
  • Reply 16 of 17

    Is it a trickle down effect from Apple? The immediate reaction appears to be to blame an Apple downturn. Has Apple begun squeezing its suppliers too tightly ? Or is it simply normal business issues within various companies in the Apple supply chain? I don’t know…but I don’t trust the analysts to know, either.


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