Shares of Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract maker of electronics, and its subsidiary, Foxconn International Holdings Ltd (富士康), fell the most in two months after the companies’ results missed analysts’ estimates.
Hon Hai dropped near its daily limit, or 6.9 percent, to close at NT$70.20 in Taipei trading, its biggest decline since Jan. 8.
Foxconn, the world’s largest contract maker of mobile phones that is 72 percent owned by Taipei-based Hon Hai, slumped 15 percent to HK$2.19 in Hong Kong trading, its biggest fall since Jan. 9.
Credit Suisse Group AG yesterday cut its rating on Hon Hai to “neutral” from “outpeform.”
It said disappointing fourth-quarter earnings were probably because of a slower economy, reorganization costs and weak results from Foxconn.
Hon Hai’s costs climbed last year, while clients — including Nokia Oyj — posted profit declines as the global recession drained demand for electronics products such as handsets.
“Hon Hai reported disappointing 4Q08 net income,” Robert Cheng (鄭勝榮) and Jill Su, Taipei-based analysts at Credit Suisse, wrote in a report.
“We are concerned about its weak 1H09 margin and the macro uncertainties in 2H09,” they wrote.
Fourth-quarter net income dropped 65 percent from a year earlier to NT$9.3 billion (US$267 million), based on figures derived from full-year results Hon Hai reported after markets closed on Friday. The quarterly profit was lower than the NT$16.8 billion median of seven analyst estimates compiled by Bloomberg.
Foxconn had a net loss of US$21.1 million in the six months ended Dec. 31, compared with a profit of US$397.4 million a year earlier. Analysts predicted profit of US$72.5 million, based on the median of three estimates in a Bloomberg survey. Foxconn’s results were derived from full-year earnings reported by the Shenzhen, China-based company on Sunday.
Foxconn’s result is “much below expectation” and the company will probably continue losing money in the first half, Charles Guo, an analyst at JPMorgan Chase & Co in Hong Kong, wrote in a report yesterday. The brokerage said Foxconn’s clients project shipments would fall in the first three months of this year and JPMorgan predicted “no significant pickup” in the second quarter.
Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) came under pressure yesterday after a report that Apple Inc is looking to shift some orders from the Taiwanese company to Intel Corp. TSMC shares fell NT$55, or 2.4 percent, to close at NT$2,235 on the local main board, Taiwan Stock Exchange data showed. Despite the losses, TSMC is expected to continue to benefit from sound fundamentals, as it maintains a lead over its peers in high-end process development, analysts said. “The selling was a knee-jerk reaction to an Intel-Apple report over the weekend,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to remain Apple Inc’s primary chip manufacturing partner despite reports that Apple could shift some orders to Intel Corp, industry experts said yesterday. The comments came after The Wall Street Journal reported on Friday that Apple and Intel had reached a preliminary agreement following more than a year of negotiations for Intel to manufacture some chips for Apple devices. Taiwan Institute of Economic Research (台灣經濟研究院) economist Arisa Liu (劉佩真) said TSMC’s advanced packaging technologies, including integrated fan-out and chip-on-wafer-on-substrate, remain critical to the performance of Apple’s A-series and M-series chips. She said Intel and Samsung
TRANSITION: With the closure, the company would reorganize its Taiwanese unit to a sales and service-focused model, Bridgestone said Bridgestone Corp yesterday announced it would cease manufacturing operations at its tire plant in Hsinchu County’s Hukou Township (湖口), affecting more than 500 workers. Bridgestone Taiwan Co (台灣普利司通) said in a statement that the decision was based on the Tokyo-based tire maker’s adjustments to its global operational strategy and long-term market development considerations. The Taiwanese unit would be reorganized as part of the closure, effective yesterday, and all related production activities would be concluded, the statement said. Under the plan, Bridgestone would continue to deepen its presence in the Taiwanese market, while transitioning to a sales and service-focused business model, it added. The Hsinchu
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has approved a capital budget of US$31.28 billion for production expansion to meet long-term development needs during the artificial intelligence (AI) boom. The company’s board meeting yesterday approved the capital appropriation plan for purposes such as the installation of advanced technology capacity and fab construction, the world’s largest contract chipmaker said in a statement. At an earnings conference last month, TSMC forecast that its capital expenditure for this year would be at the higher end of the US$52 billion to US$56 billion range it forecast in January in response to robust demand for 5G, AI and
RSS