TAIPEI (Reuters) - Hon Hai Precision Industry Co Ltd 2317.TW reported third-quarter net profit dropped 8.6 percent, its fourth straight quarterly fall, due to losses from Japanese electronics-maker Sharp 6753.T which it acquired earlier this year.
Net profit at the world’s largest contract electronics manufacturer for July-September dropped to T$34.6 billion ($1.1 billion), it said in a statement on Friday. That was 8.6 percent lower than the T$37.9 billion in the year-ago quarter, according to the Reuters calculations.
The latest quarterly net profit beat the average T$33.3 billion expected by 10 analysts, according to Thomson Reuters Starmine.
The results of Hon Hai, also known as Foxconn, are closely watched because they reflect the outlook for Apple Inc AAPL.O, its biggest client.
After Foxconn bought two-thirds of Sharp for around $3.7 billion in August, it consolidated the Japanese company’s results with its own for the first time this quarter. Sharp reported a net loss of 17.9 billion yen for July-September.
Some analysts, such as Masterlink Securities Investment’s Hsieh Ming-hsiu, predict Foxconn will have to absorb Sharp’s costs and losses for some time more, despite Sharp’s hopes to return to profitability by the second half of its fiscal year, which ends in March.
Even so, Foxconn, the main assembler of Apple’s iPhones, took a boost from the launch of iPhone 7 and iPhone 7 Plus in September.
While Apple reported sales of its iPhones as falling for three successive quarters this year, analysts say Foxconn’s quarter-on-quarter revenue growth should rise in the fourth quarter, as the iPhone shipments are more backloaded then.
Foxconn may also benefit from Apple's major rival, Samsung Electronics 005930.KS, culling its Galaxy Note 7 series due to reports of battery fires. As a result, Apple could gain around 2 to 3 million of Samsung's 20 million per year Note series sales in the fourth quarter, some analysts have said.
Foxconn does not publish release dates of its results, make projections or hold briefings on its earnings. But it discloses monthly revenues, as required in Taiwan, and announced last month third-quarter revenue of T$1.074 trillion, flat compared to the year-ago period’s T$1.066 trillion.
($1 = 31.8330 Taiwan dollars)
Reporting by Jess Macy Yu in Taipei and Meg Shen in Hong Kong; Editing by Muralikumar Anantharaman and Ruth Pitchford
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