Foxconn posts weaker than expected rise in third-quarter profit

“Taiwan’s Foxconn posted a weaker than expected rise in quarterly profit amid warning signs from key customer Apple Inc and its global suppliers that demand for iPhones could be softening,” Reuters reports. “Foxconn, formally known as Hon Hai Precision Industry Co Ltd, reported net profit of T$24.88 billion ($805.52 million) for the third quarter on Tuesday, 12 percent short of analyst expectations.”
“While this was the biggest quarterly profit the company has posted this year and came in 18 percent above the year-earlier results, it was below a mean estimate of T$28.26 billion ($916.85 million) from nine analysts, according to I/B/E/S data from Refinitiv,” Reuters reports. “Apple warned earlier this month that holiday sales would miss Wall Street expectations due to weakness in emerging markets including India and foreign-exchange costs.”
“Shares in Foxconn and other Asian suppliers and assemblers for Apple fell on Tuesday after several component makers warned of weaker than expected results, leading some market watchers to call the peak for iPhones in several key markets,” Reuters reports. “Foxconn is a key assembler of the iPhone XR model, according to analysts, the cheapest of this year’s new launches and a model that is likely seeing very little traction with customers.”
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MacDailyNews Take: Again, if iPhone XR rally is “seeing very little traction with customers” – Big IF – then demand for the other, higher-priced X-class iPhones is likely better than expected.
If there actually is an issue with iPhone XR sales — and the jury is still way out on that one — that could be a good thing for Apple as it could mean that when spending over $750 on an iPhone, more people than ever say to themselves, “Well, I might as well get the very best one available,” and buy the iPhone Xs Max over iPhone XR. This would positively impact Apple’s iPhone ASP, of course. — MacDailyNews, November 9, 2018