Sat, Aug 04, 2007 - Page 12 News List

Foxconn shares boosted by Nokia's increased earnings

Bloomberg

Shares of Foxconn International Holdings Ltd (富士康控股), the world's largest contract mobile phone maker and a unit of Taipei-based Hon Hai Precision Industry Co (鴻海精密), rose after earnings at its customer Nokia Oyj more than doubled.

The stock rose 3.8 percent to HK$21.95 at the close in Hong Kong yesterday, after gaining as much as 5.7 percent earlier. The benchmark Hang Seng Index advanced 0.4 percent.

Second quarter net income at Nokia, the world's biggest handset maker, surged to 2.83 billion euros (US$3.9 billion) as sales rose 28 percent. The Finnish company may overtake Motorola Inc as Foxconn's largest customer this year, according to Steven Tseng (曾續良), an analyst at ABN Amro Holding NV.

strong growth

"The strong growth at Nokia will support Foxconn's earnings," Tseng said. "Nokia is taking market share from other Foxconn clients, but the overall effect should be positive."

He rates shares of Foxconn, based in Shenzhen, China, "neutral."

Nokia is estimated to account for 45 percent of Foxconn's revenue this year, up from about 40 percent last year, UBS AG analyst Arthur Hsieh (謝宗文) said in a report on June 15. Motorola's share of Foxconn's sales may drop to 37 percent this year from more than 53 percent last year, Hsieh said.

Motorola was unseated by South Korea's Samsung Electronics Co as the world's second-largest handset maker in the second quarter, researcher Strategy Analytics Inc said in a report on Wednesday.

other customers

Foxconn is seeking to boost sales to other customers to offset slower growth from Motorola, chairman Samuel Chin (陳偉良) said on June 12. Sales to Sony Ericsson Communications Ltd, the industry's No. 4, will exceed 10 percent of Foxconn's revenue this year, from a "single digit" percentage last year, Chin said.

Nokia, based in Espoo, Finland, had 39.1 percent of the worldwide mobile phone market in the second quarter, compared with 33.7 percent a year earlier, Strategy Analytics said. Samsung Electronics Co's market share rose to 14.5 percent from 10.9 percent, while Motorola's share fell to 13.8 percent from 22.3 percent a year ago, the research company said.

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