FIH Mobile Ltd (富智康) yesterday issued a profit warning for the first half of the year in a statement filed with Hong Kong Exchanges and Clearing Ltd.
The Hon Hai Precision Industry Co (鴻海精密) subsidiary said it expected to post a net loss of less than US$110 million for the six-month period ending in June, as the acquisition of Nokia’s feature phone business weighed on its bottom line.
Joining forces with Finland-based HMD Global, the company in December last year completed a deal to acquire Nokia’s assets from Microsoft Corp for US$350 million.
The acquisition price was only a small fraction of the US$7.2 billion Microsoft paid for them in 2014.
SETBACK
The expected loss for FIH, in which Hon Hai owns about a 70 percent stake, represented a significant retreat from a net profit of US$20.82 million in the same period last year, FIH said.
In the statement, the company attributed the expected lackluster first-half performance to “costs relating to a new business group within the company under a collaboration agreement announced on May 18 last year,” referring to the deal to buy the Nokia assets.
FIH said it expected to continue to book the costs related to the acquisition in the second half.
Despite the profit warning, FIH said its consolidated revenue for the first half of the year could surpass US$4.6 billion, up more than 99 percent from a year earlier.
An aggressive investor in India, FIH made the deal with Microsoft last year partly to support parent Hon Hai’s interest in building its presence in the fast-growing Indian mobile phone market.
Under the deal, FIH acquired Nokia’s assets, which involve the technology, manufacturing, design and marketing of cellphones and other handheld devices under the Nokia name, as well as some of Nokia’s intellectual property.
HON HAI
Because Hon Hai owns a majority stake in FIH, its profitability is likely to also suffer this year, analysts said.
Hon Hai last year posted a net profit of NT$148.66 billion (US$4.9 billion), up 1.22 percent from a year earlier, or earnings per share of NT$8.60, compared with NT$8.54 in 2015.
The figure was the highest in Hon Hai’s history, boosted largely by the launch of the latest iPhones by Apple Inc in September last year.
The new iPhones — the 5.5-inch iPhone 7 Plus and the 4.7-inch iPhone 7 — helped Hon Hai command a higher profit margin.
Its bottom line also benefited from foreign-exchange gains due to a weaker New Taiwan dollar in the fourth quarter, analysts said.
PATENTS: MediaTek Inc said it would not comment on ongoing legal cases, but does not expect the legal action by Huawei to affect its business operations Smartphone integrated chips designer MediaTek Inc (聯發科) on Friday said that a lawsuit filed by Chinese smartphone brand Huawei Technologies Co (華為) over alleged patent infringements would have little impact on its operations. In an announcement posted on the Taiwan Stock Exchange, MediaTek said that it would not comment on an ongoing legal case. However, the company said that Huawei’s legal action would have little impact on its operations. MediaTek’s statement came after China-based PRIP Research said on Thursday that Huawei filed a lawsuit with a Chinese district court claiming that MediaTek infringed on its patents. The infringement mentioned in the lawsuit likely involved
Taipei is today suspending work, classes and its US$2.4 trillion stock market as Typhoon Gaemi approaches Taiwan with strong winds and heavy rain. The nation is not conducting securities, currency or fixed income trading, statements from its stock and currency exchanges said. Authorities had yesterday issued a warning that the storm could affect people on land and canceled some ship crossings and domestic flights. Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) expects its local chipmaking fabs to maintain normal production, the company said in an e-mailed statement. The main chipmaker for Apple Inc and Nvidia Corp said it has activated routine typhoon alert
GROWTH: TSMC increased its projected revenue growth for this year to more than 25 percent, citing stronger-than-expected demand for AI devices and smartphones The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) yesterday raised its forecast for Taiwan’s GDP growth this year from 3.29 percent to 3.85 percent, as exports and private investment recovered faster than it predicted three months ago. The Taipei-based think tank also expects that Taiwan would see a 8.19 percent increase in exports this year, better than the 7.55 percent it projected in April, as US technology giants spent more money on artificial intelligence (AI) infrastructure and development. “There will be more AI servers going forward, but it remains to be seen if the momentum would extend to personal computers, smartphones and
Catastrophic computer outages caused by a software update from one company have once again exposed the dangers of global technological dependence on a handful of players, experts said on Friday. A flawed update sent out by the little-known security firm CrowdStrike Holdings Inc brought airlines, TV stations and myriad other aspects of daily life to a standstill. The outages affected companies or individuals that use CrowdStrike on the Microsoft Inc’s Windows platform. When they applied the update, the incompatible software crashed computers into a frozen state known as the “blue screen of death.” “Today CrowdStrike has become a household name, but not in