Hon Hai first quarter net income rises to NT$5.7bn

Hon Hai Precision Industry Co (鴻海精密), Taiwan's largest electronics company, said first-quarter profit rose by a fifth as it made more computers for Dell Inc and more mobile phones for Motorola Inc.

Net income increased to NT$5.7 billion (US$171.2 million), or NT$2.18 per share, from NT$4.8 billion, or NT$1.92, a year earlier, the company said in a statement to the Taiwan Stock Exchange. Sales, posted earlier, rose 30 percent to NT$78.4 billion.

Hon Hai this year may overtake Singapore-based Flextronics International Ltd as the world's leading maker of electronics for other companies after buying Ambit Microsystems Corp (國電), said Roland Wee, an analyst with ABN Amro Asia Ltd in Taipei. Hon Hai has increased profit while rivals such as Solectron Corp have posted years of losses.

"The fundamentals are still good," said Eddie Chiu, a fund manager at First Global Investment Trust Co. "The short-term sentiment is a bit weak."

The company has overtaken rivals such as Milpitas, California-based Solectron to become the world's second-largest maker of electronics for other companies by keeping production costs low, according to Wee.

In November, Hon Hai agreed to buy Ambit for NT$36.7 billion in stock. The contribution of Taiwan-based Ambit will help Hon Hai increase sales this year by more than a fifth to exceed NT$400 billion, said Paul Tsai, a fund manager at International Investment Trust in Taipei.

Ambit makes parts for telecommunications equipment and orders from mobile-phone and network-gear makers will boost Hon Hai's growth, Tsai said earlier.

Hon Hai in August agreed to buy Finnish cellphone-cover maker Eimo Oyj for 67 million euros (US$80 million) in cash.

The purchase will help Hon Hai win business from Finland's Nokia Oyj, the world's largest handset maker, according to Ellen Tseng, an analyst with Morgan Stanley & Co in Taipei.

The company has been shifting from computers to telecommunications to help maintain sales growth, Tsai said earlier.