Foxconn profits ride high on iPhone X, dispelling worries about Apple's sales

Posted:
in iPhone
Apple assembly partner Hon Hai -- better known as Foxconn -- has posted net income of $2.5 billion for the December quarter, reportedly linked to strong orders and consequent sales of the iPhone X.




The figure exceeded the roughly $2 billion anticipated, Bloomberg said. Foxconn is highly dependent on Apple, from which it's thought to generate over half its revenue, much of that from iPhones. The manufacturer didn't break down its latest results by company or product.

Apple CEO Tim Cook has asserted that the iPhone X sold well during the critical holiday season. Both before and after the phone's launch, there have been fears that its high cost -- starting at $999, before any upgrades, warranties, or accessories -- could steer people towards Android or cheaper iPhones.

Specifically, Cook said that the iPhone X was the company's best-selling iPhone since the early November launch, all the way up to the day of the last quarterly earnings report on Feb. 1.

Most recently, Cowen and Company analyst Karl Ackerman suggested that iPhone X production has met expectations, but could drop lower.

RBC Capital Markets' Amit Daryanani recently claimed that Apple has had "limited success" pitching the iPhone X at its current price, and might sell this fall's follow-up for $899 instead. A bigger 6.5-inch OLED iPhone might sell for $999.

it isn't certain where either analyst sourced the data that they used to reach their conclusions. Every first quarter has a reduction in iPhone orders because of seasonality, and that "reduction" may be being misinterpreted by the analysts as an unusual one.

For people unwilling to spend either sum on a smartphone, Apple is expected to ship a 6.1-inch LCD model that may nevertheless have Face ID and an edge-to-edge display, unlike the iPhone 8 and 8 Plus.
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Comments

  • Reply 1 of 29
    wood1208wood1208 Posts: 2,011member
    If all true than guess what can happen end of year and next year when 3 iPhones with better price point comes out ?
  • Reply 2 of 29
    78Bandit78Bandit Posts: 234member
    Does Foxconn get paid that much more just assembling an iPhone X vs. an iPhone 8 or an iPhone 7?  Apple sources most of its components directly so Foxconn isn't making a profit off the higher cost A11 processor, the AMOLED screen, or the FaceID module.  I can see overall iPhone orders affecting revenue, but attributing that revenue to a specific model is quite a leap of logic.
    PickUrPoisonmuthuk_vanalingamholmstockd
  • Reply 3 of 29
    DAalsethDAalseth Posts: 725member
    It all boils down to you want to believe. A third or fourth hand rumour from someone that may work at a factory that might make something connected with iPhones, that says he might have seen fewer pallets coming and going than he would have expected, and then published on a news site with a poor track record? Or the official filings of profits for the quarter made by company executives to their shareholders? That’s why I don’t get worried about these “iPhoneX is a failure” rumours. I concider the source.
    Muntzbb-15randominternetpersonmagman1979h2pgilly33muthuk_vanalingamwatto_cobra
  • Reply 4 of 29
    NotsofastNotsofast Posts: 434member
    All these sites just keep repeating rank speculation from analysts.  I don't blame the "analysts," as they don't seem to be claiming its anything other than their opinion for the most part.  It's the various web sites, desperate for material and clicks , that put out what is essentially fake news.  They are also incentivized to repeat them because the "APPLE IS DOOMED" headline attracts more clicks.
    Muntzwatto_cobra
  • Reply 5 of 29
    rogifan_newrogifan_new Posts: 4,194member
    Tim Culpan (@tculpan)
    Foxconn's Hon Hai unit just posted 4Q net income that beat estimates by a ton.
    But don't thank Apple or iPhone. Operating profit sucked. 
    Instead, Hon Hai juiced the numbers with a spree of highly profitable asset disposals during the quarter.
  • Reply 6 of 29
    kruegdudekruegdude Posts: 340member
    78Bandit said:
    Does Foxconn get paid that much more just assembling an iPhone X vs. an iPhone 8 or an iPhone 7?  Apple sources most of its components directly so Foxconn isn't making a profit off the higher cost A11 processor, the AMOLED screen, or the FaceID module.  I can see overall iPhone orders affecting revenue, but attributing that revenue to a specific model is quite a leap of logic.
    Connecting the dots. 

    Cook said that the iPhone X was the company's best-selling iPhone since the early November launch”

    plus a net income that’s $.5 billion more than anticipated. 
    SoliMuntzbb-15watto_cobra
  • Reply 7 of 29
    lukeilukei Posts: 333member
    78Bandit said:
    Does Foxconn get paid that much more just assembling an iPhone X vs. an iPhone 8 or an iPhone 7?  Apple sources most of its components directly so Foxconn isn't making a profit off the higher cost A11 processor, the AMOLED screen, or the FaceID module.  I can see overall iPhone orders affecting revenue, but attributing that revenue to a specific model is quite a leap of logic.
    Sub contract manufacturers often get paid a % of the components for processing, inspecting and testing them. So yes a higher component price will affect margins. 
    edited March 2018
  • Reply 8 of 29
    I'm not going to try to connect Foxconn's profits with high iPhone sales but I really wish all the fake news about Apple's constantly decreasing iPhone sales would stop. There's simply no need for all those unconfirmed rumors from analysts. Why can't analysts wait until the quarterly financial announcements like they do for most companies if they're only going to be taking wild guesses? I believe they're deliberately trying to mislead Apple investors and shareholders. Their nonsense has little effect upon my decisions because overall, I think Apple is doing pretty well. Sure, it's not a FANG stock but the company is still profitable and that should be good enough for the average investor. Analysts calling for investors to dump Apple in order to buy Facebook or Netflix is just sickening. There's surely no need for the same analysts to slash sales numbers two times in a month for the sake of day traders. Saying things like the iPhone X is a failure because analyst expectations weren't met is really a cheap shot for a smartphone they originally said no one would buy because of the high price-tag.
  • Reply 9 of 29
    512ke512ke Posts: 782member
    So, there is a belief aka a "worry" that people will not be willing to pay a high price for the iPhone X. Meanwhile, the reality as explained very clearly by Tim, is that the iPhone X has been selling well. Nevertheless, the internet is flooded with articles claiming that the iPhone X is a flop. What is one to do about this ridiculous situation? The answer: buy more Apple stock.

    You can't change the fact that people are irrational, so you might as well be opportunistic. That statement doesn't bring me joy but it can bring you a little additional wealth.
    watto_cobra
  • Reply 10 of 29
    iPhone X is hands down the best phone I’ve ever had. I have 6 employees who have company provided iPhone X’s and they all share the same sentiment. Cost may have been a limiting factor for some, however that likely represents a much smaller segment of Apples market share (high end) than say that of Android (mid to low). I think sales numbers will be surprising next quarter, bearing in mind the expected seasonal downturn.
    king editor the grateStrangeDayswatto_cobra
  • Reply 11 of 29
    metrixmetrix Posts: 253member
    iPhone X is hands down the best phone I’ve ever had. I have 6 employees who have company provided iPhone X’s and they all share the same sentiment. Cost may have been a limiting factor for some, however that likely represents a much smaller segment of Apples market share (high end) than say that of Android (mid to low). I think sales numbers will be surprising next quarter, bearing in mind the expected seasonal downturn.
    I agree, this may be the best iPhone i have ever owned. Its super smooth interaction makes it great. There are still some bugs in Messages that need resolving and a few other IOS issues but the hardware is superb! Sometimes I will fall asleep with video running all night long and plugged in to outlet but its only slightly warm to the touch and fully charged.
    king editor the gratewatto_cobra
  • Reply 12 of 29
    seanismorrisseanismorris Posts: 1,085member
    Notsofast said:
    All these sites just keep repeating rank speculation from analysts.  I don't blame the "analysts," as they don't seem to be claiming its anything other than their opinion for the most part.  It's the various web sites, desperate for material and clicks , that put out what is essentially fake news.  They are also incentivized to repeat them because the "APPLE IS DOOMED" headline attracts more clicks.
    Except the “analysts” can’t find their a** with both hands.  Their job comes down to making sh** up.

    Almost all “analysts” opinions are basically worthless.
    magman1979watto_cobra
  • Reply 13 of 29
    macseekermacseeker Posts: 449member
    The perfect award for all those Apple naysayers:


    RonnnieOmagman1979watto_cobra
  • Reply 14 of 29
    magman1979magman1979 Posts: 1,139member
    AppleInsider said:
    Apple CEO Tim Cook has asserted that the iPhone X sold well during the critical holiday season. Both before and after the phone's launch, there have been fears that its high cost -- starting at $999, before any upgrades, warranties, or accessories -- could steer people towards Android or cheaper iPhones.
    Come off it, there was NEVER any worry of the kind! ANYONE you talked to who was citing the cost of an iPhone X was NOT clamouring to go to Android due to this, they were considering the 8 or 7, even 6S instead!

    This is such FUD! I expected more from AppleInsider writers!
    Tim Culpan (@tculpan)
    Foxconn's Hon Hai unit just posted 4Q net income that beat estimates by a ton.
    But don't thank Apple or iPhone. Operating profit sucked. 
    Instead, Hon Hai juiced the numbers with a spree of highly profitable asset disposals during the quarter.
    That guy is full of shit, as he doesn’t cite ANY sources for his tweet, just another anal-yst making up anti-Apple BS, and you re-posted that garbage here, which doesn’t shine you in a positive light either.
    iPhone X is hands down the best phone I’ve ever had. I have 6 employees who have company provided iPhone X’s and they all share the same sentiment. Cost may have been a limiting factor for some, however that likely represents a much smaller segment of Apples market share (high end) than say that of Android (mid to low). I think sales numbers will be surprising next quarter, bearing in mind the expected seasonal downturn.
    Indeed, having owned one since launch, and just having updated to iOS 11.3, it’s the ultimate smartphone ever made, hands down! Yes the cost is definitely a deterrent to some in the market for a smartphone, but that’s OK, since there are still other iPhone’s that are priced more competitively, and still offer everything an iPhone stands for.
    metrix said:
    iPhone X is hands down the best phone I’ve ever had. I have 6 employees who have company provided iPhone X’s and they all share the same sentiment. Cost may have been a limiting factor for some, however that likely represents a much smaller segment of Apples market share (high end) than say that of Android (mid to low). I think sales numbers will be surprising next quarter, bearing in mind the expected seasonal downturn.
    I agree, this may be the best iPhone i have ever owned. Its super smooth interaction makes it great. There are still some bugs in Messages that need resolving and a few other IOS issues but the hardware is superb! Sometimes I will fall asleep with video running all night long and plugged in to outlet but its only slightly warm to the touch and fully charged.
    Have you updated to iOS 11.3 yet? Most of the issues I saw in Messages, and the rest of the OS, have been addressed in this update, with the exception of missing new features like Messages in the Cloud, which I am DYING to get!

    StrangeDayswatto_cobrabshank
  • Reply 15 of 29
    Tim Culpan (@tculpan)
    Foxconn's Hon Hai unit just posted 4Q net income that beat estimates by a ton.
    But don't thank Apple or iPhone. Operating profit sucked. 
    Instead, Hon Hai juiced the numbers with a spree of highly profitable asset disposals during the quarter.
    Without a link, it's fake news. You shouldn't propagate crap like this, unless you can verify it.
    magman1979muthuk_vanalingamwatto_cobrabshank
  • Reply 16 of 29
    macxpressmacxpress Posts: 4,979member
    I just don't get why everyone is so bent out of shape about iPhone X sales. Every other day there's a stupid article about how its not doing very well. This is also the first time that I can remember that Apple has 2 brand new phones out at the same time in addition to the outgoing model, the iPhone 7 and of course the iPhone SE. iPhone X doesn't need to sell 50-80M per quarter. Maybe Apple never expected those kinds of numbers, especially when it has the iPhone 8 out there as well. Its a premium phone at a high price so I myself, never expected it to be really high in terms of sales. 

    It goes back to what I've said before...it seems like the media and just waiting for Apple to fail....because it will give them a high story to write about. If they stop and think, I bet a lot of them write on a Apple device so again, I don't understand why when they use an Apple device all they seem to want to write about is Apple's doom and gloom. 
    watto_cobra
  • Reply 17 of 29
    bsimpsenbsimpsen Posts: 300member
    https://asia.nikkei.com/Business/AC/Foxconn-suffers-first-yearly-profit-drop-since-2008-as-iPhone-slumps

    From that article: "Foxconn posted net profit of NT$71.65 billion in the October-December quarter, up 4.2% on the year, but that growth came mainly from an NT$66 billion gain tied to the disposal of Sharp's preferred stock at the end of December rather than iPhone sales."
    gatorguy
  • Reply 18 of 29
    bsimpsen said:
    https://asia.nikkei.com/Business/AC/Foxconn-suffers-first-yearly-profit-drop-since-2008-as-iPhone-slumps

    From that article: "Foxconn posted net profit of NT$71.65 billion in the October-December quarter, up 4.2% on the year, but that growth came mainly from an NT$66 billion gain tied to the disposal of Sharp's preferred stock at the end of December rather than iPhone sales."
    If this Nikkei link turns out to be true — they’ve been incorrectly and repeatedly on Apple’s case over the iPhone X in the past few months, however — then the post from @rogifan_new is correct, and I retract what I said earlier.
    muthuk_vanalingamholmstockd
  • Reply 19 of 29
    bsimpsen said:
    https://asia.nikkei.com/Business/AC/Foxconn-suffers-first-yearly-profit-drop-since-2008-as-iPhone-slumps

    From that article: "Foxconn posted net profit of NT$71.65 billion in the October-December quarter, up 4.2% on the year, but that growth came mainly from an NT$66 billion gain tied to the disposal of Sharp's preferred stock at the end of December rather than iPhone sales."
    If this Nikkei link turns out to be true — they’ve been incorrectly and repeatedly on Apple’s case over the iPhone X in the past few months, however — then the post from @rogifan_new is correct, and I retract what I said earlier.
    Why is every other news outlet (Bloomberg, WSJ, etc) aside from Nikkei reporting this differently?  None of them are exactly known for spinning news in Apple's favor.  I'm going to go out on a limb and say that Nikkei is once again full of BS. 
    edited March 2018 watto_cobra
  • Reply 20 of 29
    magman1979magman1979 Posts: 1,139member
    macxpress said:
    I just don't get why everyone is so bent out of shape about iPhone X sales. Every other day there's a stupid article about how its not doing very well. This is also the first time that I can remember that Apple has 2 brand new phones out at the same time in addition to the outgoing model, the iPhone 7 and of course the iPhone SE. iPhone X doesn't need to sell 50-80M per quarter. Maybe Apple never expected those kinds of numbers, especially when it has the iPhone 8 out there as well. Its a premium phone at a high price so I myself, never expected it to be really high in terms of sales. 

    It goes back to what I've said before...it seems like the media and just waiting for Apple to fail....because it will give them a high story to write about. If they stop and think, I bet a lot of them write on a Apple device so again, I don't understand why when they use an Apple device all they seem to want to write about is Apple's doom and gloom. 
    Remember the iPhone 5C narrative about what a failure it was and how poorly it sold, yet it sold like hotcakes? This is simply chapter 2 of that story, end of line.
    bsimpsen said:
    https://asia.nikkei.com/Business/AC/Foxconn-suffers-first-yearly-profit-drop-since-2008-as-iPhone-slumps

    From that article: "Foxconn posted net profit of NT$71.65 billion in the October-December quarter, up 4.2% on the year, but that growth came mainly from an NT$66 billion gain tied to the disposal of Sharp's preferred stock at the end of December rather than iPhone sales."
    So you trust the word of one of the most anti-Apple, most-often incorrect news outlet, who doesn’t even cite sources, as backing up the narrative that Hon Hai’s leap in profit is not attributable to Apple sales of iPhone X?

    Gotcha, now I know those claims from that guy on Twitter was full of BS!

    Oh, speaking of BS:

    "The delayed shipments, as well as the weak iPhone 8 and iPhone X sales, weighed significantly on Foxconn's profitability," Vincent Chen, a Yuanta Securities Investment Consulting analyst, told the Nikkei Asian Review.“

    So once again an “anal-yst” from a securities investments firm, is used in this article to set the tone, coincidence?
    edited March 2018 watto_cobra
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