Apple assembler Foxconn sees Q4 profits drop 12.6 percent on weak iPhone sales

AppleInsider said:

Apple's core assembly partner, Foxconn, saw net profits drop 12.6 percent in the fourth quarter, a figure almost certainly linked to declining iPhone sales.

Profits were approximately $2 billion, versus about $2.3 billion in the same quarter a year ago, according to the Wall Street Journal. That's despite revenue rising 4.6 percent to $58.69 billion. The consensus estimate for profits sat at $1.2 billion prior to the announcement.

Foxconn didn't elaborate on the results, but the manufacturer is known to depend on Apple for as much as half of its revenue, and the iPhone is by far the most critical product to Apple's bottom line.

On Jan. 2 Apple warned investors that its December-quarter revenue would come closer to $84 billion, missing original guidance by at least $5 billion. The company ultimately reported $84.3 billion in revenue, down from $88.3 billion a year prior.

The miss was blamed squarely on iPhone sales, which fell 15 percent year-over-year to $52 billion. Narrowing further, Apple said it faced the harshest situation in China, hampered by factors like exchange rates, general economic woes, and tough competition from lower-priced local alternatives.

Thanks to improved prices and trade-in offers Chinese demand has been recovering. It's doubtful however that sales will resume real growth until the fall, when 2019 iPhone designs ship.

It could be that Apple will face a tough slog regardless. Global smartphone demand has been plateauing or even on a downward slope, something impacting both Apple and its chief rival, Samsung. The latter is already warning of disappointing results for the March quarter, albeit blaming "weakening overall demand" for its electronics along with a "widening price fall among major products."

I am really puzzled why everyone likes to ignore the elephant in the room as to why these companies’ sales are being unusually deminished in the 4th quarter when America’s economy is supposedly greater than ever. Trade wars are like being in a glass house and throwing stones. The concept of trade deficits are outdated. Many of our companies make the bulk of the profits collected from sales around the world including in China so they are not reflected. 

Weak iPhone sales = sales any other smart phone brand would kill for.

Revenue up yet profits down? Why doesn’t increased revenue imply higher sales? Decreased profit could be for many reasons.

genovelle said:

AppleInsider said:

Apple's core assembly partner, Foxconn, saw net profits drop 12.6 percent in the fourth quarter, a figure almost certainly linked to declining iPhone sales.

Profits were approximately $2 billion, versus about $2.3 billion in the same quarter a year ago, according to the Wall Street Journal. That's despite revenue rising 4.6 percent to $58.69 billion. The consensus estimate for profits sat at $1.2 billion prior to the announcement.

Foxconn didn't elaborate on the results, but the manufacturer is known to depend on Apple for as much as half of its revenue, and the iPhone is by far the most critical product to Apple's bottom line.

On Jan. 2 Apple warned investors that its December-quarter revenue would come closer to $84 billion, missing original guidance by at least $5 billion. The company ultimately reported $84.3 billion in revenue, down from $88.3 billion a year prior.

The miss was blamed squarely on iPhone sales, which fell 15 percent year-over-year to $52 billion. Narrowing further, Apple said it faced the harshest situation in China, hampered by factors like exchange rates, general economic woes, and tough competition from lower-priced local alternatives.

Thanks to improved prices and trade-in offers Chinese demand has been recovering. It's doubtful however that sales will resume real growth until the fall, when 2019 iPhone designs ship.

It could be that Apple will face a tough slog regardless. Global smartphone demand has been plateauing or even on a downward slope, something impacting both Apple and its chief rival, Samsung. The latter is already warning of disappointing results for the March quarter, albeit blaming "weakening overall demand" for its electronics along with a "widening price fall among major products."

I am really puzzled why everyone likes to ignore the elephant in the room as to why these companies’ sales are being unusually deminished in the 4th quarter when America’s economy is supposedly greater than ever. Trade wars are like being in a glass house and throwing stones. The concept of trade deficits are outdated. Many of our companies make the bulk of the profits collected from sales around the world including in China so they are not reflected. 

First, Foxconn numbers being done is not all about Apple, Foxconn has 1000's of customers, for them to be down this much, means their other customers are having issue as well. From what I am hearing and seeing the trade war is actually hurting China more than the US at this point. US manufacturers like Apple are really good at reducing their costs, meaning they are pulling out of China where it makes sense. China is loosing some of their production, I know my company began pulling product out of China when we heard these tariffs we coming. We moved things to Taiwan, and Mexico. In some cases Chinese company have been willing to absorb some of the tariff themselves to avoid losing the business. US companies are not going to absorb the 10% tariff in many cases they will not pass it along so they are moving production to avoid the costs.

China's economy is highly depended on US companies manufacturing there then exporting around the world. If US companies pull out, China is going to hurt.