Bloomberg has reported that Apple’s Taiwan-based partner, Hon Hai Precision also popular as Foxconn Technology Group, has declared its fourth quarter results of 2012 according to which the world’s leading contract-based manufacturer of electronics has posted record profits. It can be judged from the net income of Foxconn that has jumped up 5.6 percent, as the manufacturing company made $1.2 billion in the last quarter. It is anticipated that Foxconn was able to post such a remarkable result because of efficient production of Apple’s latest devices, which includes iPad 4, iPad Mini and iPhone.
According to iPhoneinCanada, “Apple, which contracts Foxconn to make its iPhones and iPads, reported the lowest gross margin in two years, indicating that it’s paying more for components and assembly.” Due to this reason the gross margin of Foxconn climbed up to 9.58 percent in the last quarter that was the highest in last three years. Hon Hai Precision was able to raise its margins and profit by sorting out its production issues, which arose during the production of iPhone 5 in the preceding quarter.
Vincent Chen, who recommends Foxconn’s stock for buy at Yuanta Financial Holding Co. in Taipei said that, “As they scaled up production of the iPhone and solved production bottlenecks, Hon Hai’s profit margins improved and they may have had some room to push Apple for better pricing. Shipments of iPhone started to drop significantly in the first quarter and there may be no new product to boost sales a lot in the second quarter either.”
Overall, it was an outstanding achievement that Foxconn has made, especially considering the fact that the Taiwan-based company has raised its margin within three years by overcoming all production issues. Now Hon Hai is looking to acquire a 9.9 percent share in Japanese electronics manufacturer, Sharp Corp, but according to the reports due to issues over company strategy, price and management control the two companies so far have failed to reach a deal.
For the time being rumour has it that the deal between the two companies is unlikely, as Sharp and Foxconn have been in talks for a long time now and since then the stock price of the Japanese company has also plunged. This was another reason which is holding Foxconn back, as the iPhone maker is rethinking how much it should offer now to Sharp for 9.9 percent stake in the company.
Source: iPhoneinCanada, CNET
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