August 29, 2009 / 4:37 AM / 9 years ago

Foxconn posts 2nd straight loss, outlook cloudy

TAIPEI, Aug 29 (Reuters) - Foxconn (2038.HK), the world’s top contract cellphone maker, posted its second straight half-year loss, and said the outlook remained cloudy, underscoring the fragility of the sector’s recovery.

A key supplier to top cellphone brands such as Motorola MOT.N and Sony Ericsson (6758.T) (ERICb.ST), Foxconn made a net loss of $18.7 million in the first half of 2009, it said in a statement on the Hong Kong Stock exchange late on Friday and seen by Reuters on Saturday.

The results were roughly in line with market expectations of a $19 million loss, according to a poll of four analysts by Reuters, and compared to the $142 million net profit recorded a year ago.

“Looking forward, the macro uncertainty originated from the sub-prime crisis continues to cloud transparency,” the firm said in the statement. “We believe the ability to broaden value-added offerings will be the key to industry competitiveness.”

Revenue also fell, slipping by over a third from a year ago to $3.16 billion, as the firm’s clients increasingly look to low-cost models to appeal to penny pinching consumers during the economic downturn.

Its results also come after major clients such as Nokia NOK1V.HE pulled the plug on them, saying that they do not plan to use subcontractors this year as demand for cellphones and other tech buys falls. [ID:nLG308202]

The company, a unit of Taiwan electronics giant Hon Hai (2317.TW), had said in late July it was expecting to see a significant decline in its first-half earnings due to lower demand and pricing for its products.

Many top brands do their own design work, but depend on contract manufacturers such as Foxconn and Singapore-based Flextronics (FLEX.O) to do the actual manufacturing, freeing them from having to manage their own production lines.

Investors have been relatively bullish on Foxconn so far this year, pushing its shares over 90 percent so far this year, compared with a roughly 40 percent advance on the benchmark Hang Seng index .HSI.

Reporting by Kelvin Soh; Editing by Sanjeev Miglani

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