Hon Hai Precision Industry Co.’s quarterly profit missed estimates after top customer Apple Inc. sold barely enough of its iPhone X to meet Wall Street’s tempered expectations.
The sole manufacturer of Apple’s flagship device reported net income of NT$24.1 billion ($810 million) in the three months ended March, compared with the average estimate of NT$27.9 billion. It had previously posted a 5.2 percent rise in sales to about NT$1.03 trillion.
Hon Hai’s result fans fears that the smartphone boom is coming to an end . While Apple reported better-than-expected results , it owed much to the sale of ancillary goodies from games to cloud storage: none of which benefit hardware partners such as Hon Hai and Taiwan Semiconductor Manufacturing Co. Their fortunes are more closely tied to iPhone unit sales -- which rose just 2.9 percent in the March quarter despite a 10th-anniversary device that was supposed to drive a demand super-cycle.
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Hon Hai, which is also known as Foxconn, gets more than half its revenue from Apple but billionaire Chairman Terry Gou’s looking for ways to expand beyond merely assembling gadgets -- especially as the smartphone market sputters. He’s now taking Foxconn Industrial Internet Co., a subsidiary focused on cloud services and smart manufacturing, public in China.
Shares in Hon Hai -- which doesn’t provide revenue breakdowns, forecasts or hold investor conferences -- rose 4.7 percent in Taipei before the results, buoyed by a plan it announced on Friday to reduce its share capital by a fifth and pay out dividends. They remain down 6.5 percent this year.
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“Without meaningful fundamental changes in operations, we don’t expect the momentum will last,” William Yang, an analyst at Citi, wrote in a note after Hon Hai’s Friday announcement.
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