(Bloomberg) -- Hon Hai Precision Industry Co.’s quarterly profit missed estimates after top customer Apple Inc. sold barely enough of its iPhone X to meet Wall Street’s tempered expectations.
The sole manufacturer of Apple’s flagship device reported net income of NT$24.1 billion ($810 million) in the three months ended March, compared with the average estimate of NT$27.9 billion. It had previously posted a 5.2 percent rise in sales to about NT$1.03 trillion.
Hon Hai’s result fans fears that the smartphone boom is coming to an end. While Apple reported better-than-expected results, it owed much to the sale of ancillary goodies from games to cloud storage: none of which benefit hardware partners such as Hon Hai and Taiwan Semiconductor Manufacturing Co. Their fortunes are more closely tied to iPhone unit sales -- which rose just 2.9 percent in the March quarter despite a 10th-anniversary device that was supposed to drive a demand super-cycle.
Hon Hai, which is also known as Foxconn, gets more than half its revenue from Apple but billionaire Chairman Terry Gou’s looking for ways to expand beyond merely assembling gadgets -- especially as the smartphone market sputters. He’s now taking Foxconn Industrial Internet Co., a subsidiary focused on cloud services and smart manufacturing, public in China.
Shares in Hon Hai -- which doesn’t provide revenue breakdowns, forecasts or hold investor conferences -- rose 4.7 percent in Taipei before the results, buoyed by a plan it announced on Friday to reduce its share capital by a fifth and pay out dividends. They remain down 6.5 percent this year.
“Without meaningful fundamental changes in operations, we don’t expect the momentum will last,” William Yang, an analyst at Citi, wrote in a note after Hon Hai’s Friday announcement.
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