Foxconn reports lower than expected Q2 earnings; report bodes poorly for global smartphone market

Foxconn reports lower than expected Q2 earnings; report bodes poorly for global smartphone market
Contract manufacturer Foxconn, known as the company that assembles the majority of Apple iPhone units, surprised analysts today by reporting lower than expected earnings for the second quarter. For the three month period from April through June, the company earned the equivalent of $567.25 million USD. That was well below the mean estimate of $711.45 million USD forecast by nine analysts.

Foxconn's lower than expected report could be a symptom of a global smartphone market that isn't exactly setting the world on fire. It also points toward tepid handset sales globally during the second half of this year. While Apple did sell a few more iPhone handsets during its fiscal third quarter than it did during the same quarter last year, it fell short of Wall Street estimates by 500,000 units. But investors focused on other positives including a 20% year-over-year rise in the average selling price for each iPhone, which hit $724. That indicated strong sales of the premium priced iPhone X during the quarter.

Foxconn's factories will soon be running at full speed as Apple is expected to introduce three new 2018 iPhone models next month (see image at the top of this article, courtesy of DetroitBORG). According to a report from Fubon Securities in Taiwan, Foxconn will be responsible for 100% of the 5.8-inch Apple iPhone X sequel, 90% of the 6.5-inch Apple iPhone X Plus model, and 75% of the 6.1-inch Apple iPhone 9. The latter will feature an LCD display, unlike the OLED screens used on the other two models.

Last month, Foxconn offered a one-time bonus of $295 USD to assembly line workers at its factory in Zhengzhou, China, who renewed their contracts. This assures the company that it will have enough workers to run the assembly lines when it needs them humming around the clock.

On the Taiwan Stock Exchange, the lower than expected earnings sent Foxconn's shares down by 2.3% to the equivalent of $2.46 USD.

source: Reuters

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11 Comments

1. Cat97

Posts: 1978; Member since: Mar 02, 2017

I think Apple did really badly as far as sales numbers with the iPhone 8 and X, but their revenue increased due to the 20% increase in average selling prices as the article states. They also sugarcoated their reports. It was a bad year for consumers (because many premium manufacturers increased prices by copying Apple) and a (semi) good year only for Apple. Samsung tried to copy Apple prices and failed badly. Sony and HTC will probably disappear in a few months. Google will probably sell a few thousand Pixel 3/XL phones and that's it. The manufactures which kept prices low saw record sales and record market shares (look at Xiaomi, OnePlus in India and China) since a lot of users were not fooled by the higher prices from premium brands. But the good news is, everyone is lowering prices in 2019, starting with Apple and its 'budget' phone. Due to this reason, the plain Galaxy S10 will probably be affordable again, add innovation (Note 9 battery size is a signal) following the 2018 stalled year and you will have a lot of bargain deals in 2019 from all the premium manufacturers.

3. Subie

Posts: 2425; Member since: Aug 01, 2015

"Samsung tried to copy Apple prices and failed badly" What... the asking price at release of the galaxy S9 was less than the asking price of the S8 last year. Cheaper by $75 here in Canada at least.

5. Finalflash

Posts: 4063; Member since: Jul 23, 2013

Well it wasn't prices as much as the S9 being a marginal upgrade. Got my mother in law an S9 plus (from S4) and it's not much different from the S8. What these iPA and other Apple mouth pieces don't seem to be talking about is that the decline in sales starting usually leads to a greater down trend as those who switch or leave take their circle of influence as well. Also the problem being that Apple is trying to focus on increasing service revenue which won't increase if they sell fewer phones. Everything is tied to the iPhone for Apple so they have to keep it alive.

9. Atechguy0

Posts: 918; Member since: Aug 03, 2018

List cat97 is an Apple zealot and has always spoken highly of Apple no matter what they have done in the past, and at the same time paint Samsung and other Android smartphones in a negative light. But cat97 continues to show the world how ignorant he truly is, by saying things like "But the good news is, everyone is lowering prices in 2019, starting with Apple and its 'budget' phone. Due to this reason, the plain Galaxy S10 will probably be affordable again, add innovation (Note 9 battery size is a signal)" Everyone except for Apple has always had low priced and real budget devices. Apples so called budget iPhone is looking to start at $700. Cat97 clearly doesn't know the meaning of budget, since he's been locked away in Apples camp.

4. p51d007

Posts: 705; Member since: Nov 24, 2013

GOOD! Let their markets slide a while, and maybe they will do a couple things. 1. DROP the prices 2. REAL innovation, not just fancy colors and added cameras.

6. MarvzIsFallen

Posts: 646; Member since: Aug 11, 2017

Android phones should drop their prices, especially Note 9, not worth it though. While apple should maintain their $999 on their base model for iphone X plus, sweet spot!

8. L0n3n1nja

Posts: 1584; Member since: Jul 12, 2016

Spending more for less is the sweet spot?

10. MarvzIsFallen

Posts: 646; Member since: Aug 11, 2017

Its iOS brother. The only phone with iOS. Exclusive!!!

11. cmdacos

Posts: 4326; Member since: Nov 01, 2016

Thankfully that true and easily avoided.

13. Atrixboyyy

Posts: 619; Member since: Nov 03, 2011

and here i thought Bankz and piyath were horrible trools...

12. tedkord

Posts: 17464; Member since: Jun 17, 2009

Yeah, they should drop the price of the Note 9,fast and away the best large phone on the market. You're a business genius!

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