Apple manufacturer Foxconn posts drop in profit with blame unclear
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.
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
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.
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.
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.