IPhone maker Hon Hai sees annual revenue drop 19%

Faith Merino · April 10, 2013 · Short URL: https://vator.tv/n/2eab

Foxconn parent Hon Hai posts revenue drop, fingers pointing at poor iPhone sales

Apple hasn’t had a great year, missing estimates every quarter since Tim Cook took the helm. Analysts are now warning that Apple will be announcing an even more dismal earnings report later this month—one so bleak that it will even miss Apple’s traditionally conservative guidance.

That has ripple effects on Apple’s partners. One such partner—Hon Hai Precision, AKA Foxconn—reported a 19.2% drop in sales last quarter compared to the same quarter last year, and fingers are pointing at Apple.

With reportedly 60-70% of its revenue coming from Apple, Foxconn’s weak earnings appear to stem from the iPhone 5’s poor performance in the market, as well as low demand for iPads.

Hon Hai posted revenue of NT$808.97 billion ($26.96 billion) for the months of January through March. That’s down from NT$1 trillion ($33 billion) in the first quarter of 2012. Analysts, meanwhile, were expecting NT$895 billion. The revenue drop is the largest in Hon Hai’s history since 2000.

"A quarterly decline was expected, but not a yearly decline," said KGI Securities analyst Ming-chi Kuo told Reuters. "This shows that Hon Hai's revenue depends too much on Apple, and iPhone orders corrected more than expected."

Of course, Hon Hai’s other partners include Dell, Nokia, and Hewlett-Packard, so Apple can’t shoulder all the blame. PCs aren’t doing so hot, and last I checked, Nokia was packing up its desk.

But if Apple is Hon Hai’s largest source of revenue, and Apple hasn’t been doing so hot, it makes sense that the Asian manufacturer would suffer as well. Several analysts have lowered their estimates for Apple after the company came in below expectations during the holiday season—typically Apple’s best quarter.

Piper Jaffray’s Gene Munster is forecasting $41.4 billion in revenue for the March quarter, which is lower than consensus estimates that peg revenue at $42.8 billion for the quarter. He also expects Apple to reveal lower than expected iPhone sales—35.5 billion for the quarter. Meanwhile, Wall Street is anticipating 37 million iPhones sold.

He’s not the only analyst who believes Apple is having a dismal quarter. Citi, Jefferies, and BTIG analysts have all warned that Apple has a good chance of coming in below its own guidance this quarter. Earlier this month, Jefferies analyst Peter Misek warned that iPhone sales likely saw a drop in March due to consumer anticipation over Samsung’s new Galaxy S4.

Many are staying optimistic, however. Munster believes that while the March and June quarters will both be dismal, Apple will have a strong second half of the year. Similarly, BTIG’s Walter Piecyk has upgraded his rating to “buy” under the belief that Apple will finish out the year strong with a new low-priced iPhone and a mystery device that will bring in $5 billion in revenue.  

 

Image source: boston.com

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