Foxconn's Profits Slide 31% as iPhone Sales Continue to Drop

[MacRumors]

Following in line with a slump in iPhone sales, Apple manufacturer Foxconn recently reported a 31 percent decline in profits in the second quarter of 2016. For the full quarter, ending in June, Foxconn was said to have amassed a net profit of 17.7 billion New Taiwan dollars, down from NT$25.7 billion a year earlier. Analysts watching the company had expected a revenue of around NT$23.9 billion for the quarter (via The Wall Street Journal).

A doom and gloom sentiment began surrounding Apple, and its overseas manufacturers, soon after the Cupertino-based company reported its first quarterly sales decline since 2003 in April. Despite a strong presence of the iPhone SE in the market, iPhone sales continued to contribute to an overall revenue decline for the company as the year continued.

The slump in the iPhone market now appears to be fully affecting Apple's manufacturing partners with the news out of Foxconn today, but both companies are looking forward to an uptick in sales in the future. Notably, Foxconn's acquisition of Japanese electronics maker Sharp has been officially approved by Chinese antitrust authorities, "clearing the final hurdle" in the lengthy buyout process. With the acquisition over, it should be easier for Foxconn to move forward with not only manufacturing of parts for the iPhone 7, but potentially even ramping up development of AMOLED displays and glass casings for the 2017 iPhone.

Overall, weak demand for the iPhone 7 -- due to a "lack of innovation" -- was predicted by a group of Apple suppliers in May. Multiple companies, like Japan Display and Taiwanese Semiconductor Manufacturing Company, reported fears of both huge net profit declines and a worrisome decrease in chip orders thanks to an overall declining iPhone market. Still, Apple CEO Tim Cook is optimistic about iPhone sales moving forward, saying that he sees "so many signs that are positive" as the company moves towards the iPhone 7 and iOS 10 in the fall.

Article Link: Foxconn's Profits Slide 31% as iPhone Sales Continue to Drop

 

[Mathias Denichi]

"so many signs that are positive"

Must be interesting to live in a world with Cook tinted glasses.

 

[enrilo]

The prices guys, the prices.

This is the begin of the end if Apple can't compete with Nexus cheaper models. I mean, why a new buyer should pay 600+$ instead of half the price for a 5X? And the 5X is not a bad smartphone at all. It's super good indeed!
I don't want to start realizing that there's no reality in the shareholders eyes. In this world Android is becoming more tough to beat, the iPhone cannot stand only on his name and on Steve's heritage. Ok Swift, ok good design, ok Apple, wow amazing! YOLO: but the troubles are emerging now more than ever.

 

[Jmausmuc]

After reading all the rumors about the new iPhone I really don't even know how thy are going to advertise it.

No headphone jack is a huge no go for many people I have talked to, myself included.

And the rumors also point to most other things staying virtually the same.
The 6S is already blazing fast so a faster processor is unlikely to convince anyone to go out and upgrade their phone either.

wht is their strategy for the new phone? Only people with yearly free upgrade plans and expiring contracts?

What am I missing?

 

[TMRJIJ]

Looks like Foxconn is going to have to 'hang in there' until next year. There really isn't much of a need to get the iPhone 7 unless you had a iPhone 6 or older.

 

[Jmausmuc]

Looks like Foxconn is going to have to 'hang in there' until next year. There really isn't much of a need to get the iPhone 7 unless you had a iPhone 6 or older.

I have a 6 and I still don't see a reason to upgrade. And people who have the 5 or 5S might be more interested in the 5SE.

Even the biggest Apple Fanboys don't seem to be able to make a case for the new phone. If you are, please do!

 

[S.B.G]

I wonder if the slump isn't just about a "lack of innovation" but maybe more, or at least partly, due to market saturation. So many people have iPhone's now and other smartphones that eventually sales would slow down at some point.

This whole "doom and gloom" sentiment seems silly to me at this point. The companies are still making money hand over fist here and they're not even close to going under or anything like that.

 

[JosephAW]

I hope Apple is not blaming Foxconn or their employees for this decline, the blame falls squarely in the head of Apple's CEO, Tim Cook.
They need new leadership that's interested in innovating again instead of promoting social policies as their top priority.

 

[NickD73]

Apple stock coming down to $90 soon. No reason for optimism for a while.

 

[A MacBook lover]

"so many signs that are positive"

Must be interesting to live in a world with Cook tinted glasses.

Yes let's live in a world with rushed products.
[doublepost=1471006051][/doublepost]

The prices guys, the prices.

This is the begin of the end if Apple can't compete with Nexus cheaper models. I mean, why a new buyer should pay 600+$ instead of half the price for a 5X? And the 5X is not a bad smartphone at all. It's super good indeed!
I don't want to start realizing that there's no reality in the shareholders eyes. In this world Android is becoming more tough to beat, the iPhone cannot stand only on his name and on Steve's heritage. Ok Swift, ok good design, ok Apple, wow amazing! YOLO: but the troubles are emerging now more than ever.

Because it runs android

 

[tjskywasher]

It's worth noting that Apple isn't Foxconn's only customer, they do in fact assemble electronic devices for many other large tech companies.

And I wish people wouldn't keep banging on about a sales decline. Compared to a normal year, such as the iPhone 5S, the iPhone 6S sales are up. Last year was an anomaly and it will happen again if rumours about next year's iPhone are anything to go by. Everyone will rush out in 2017 and buy the latest iPhone and in 2018-2019 I can see the Apple is doomed, sales are down nonsense again. It's just the nature of the beast, we've been here before and it'll happen again.

 

[Savor]

The girl in the far right looks like iPhone Girl from 2008!

Nice to see her again after eight years.

 

[maxsix]

The slap of reality hits Apple hard.

Will it be enough to wake up the mass market gadget maker? Probably not since they'll continue on based on the huge gross margins they make on all products. Too big to fail, they'll simply keep going in one form or another.

 

[mw360]

After reading all the rumors about the new iPhone I really don't even know how thy are going to advertise it.

No headphone jack is a huge no go for many people I have talked to, myself included.

And the rumors also point to most other things staying virtually the same.
The 6S is already blazing fast so a faster processor is unlikely to convince anyone to go out and upgrade their phone either.

wht is their strategy for the new phone? Only people with yearly free upgrade plans and expiring contracts?

What am I missing?

They'll do what they often do - take the most obvious shortcoming, and flip it around to make it look like the exact opposite. So they'll sell it as the music lover's iPhone: stereo speakers, 'digital quality' Lightning earphones / wireless earphones and the new Music app.

Past examples: our most expandable Mac ever (the unexpandable Mac Pro), the Plastic Perfected 5C, and 'the only that that's changed is everything' which works for pretty much any lacklustre update.

 

[radiology]

The market is saturated. Without significant innovation nobody will upgrade just to have the latest model. I'm happy with my iPhone 6 and won't upgrade till it really makes a difference.

 

[PBG4 Dude]

I have a 6 and I still don't see a reason to upgrade. And people who have the 5 or 5S might be more interested in the 5SE.

Even the biggest Apple Fanboys don't seem to be able to make a case for the new phone. If you are, please do!

After getting my son one a couple of months ago, I'm thinking of replacing my iPhone 6 with an SE. Fits much better in my hand and I care nothing about force touch or 3D Touch or whathaveyou.

 

[maxsix]

And I wish people wouldn't keep banging on about a sales decline.

Reality is hard for many to face.

 

[kamalds]

Almost no innovation in specs and design. And looks at HTC One 10 and Samsung Galaxy S and Note series - new features and design galore!

 

[djcerla]

After reading all the rumors about the new iPhone I really don't even know how thy are going to advertise it.

No headphone jack is a huge no go for many people I have talked to, myself included.

For example: no more tangling cables, AirPods included in the box.

For us tech geeks wireless earbuds may almost look like old tech, but not for the average Joe. Especially if Apple manages to build in long battery life (>10 hours) and a male Lightning connector for on-the-fly charge, as pioneered on the Pencil.

What is now seen as a user hostile and stupid move (probably because few see Apple bundling more expensive earbuds) may well turn into a powerful selling point; and rest assured that the advertising will beat on that drum a lot.

 

[OldSchoolMacGuy]

A company that large doesn't see profits slide that much just from iPhone sales.

Remember, FoxConn makes electronics for EVERYONE. Samsung, Dell, Microsoft, Google, Amazon, HP, HTC, and more. They make everything.

 

[Supermacguy]

Business owners need to understand when they have a great thing going, and bank the extra cash for the future. No business can reliably depend on enormous profit margins that are above industry norms. The responsible thing to do is, ride the wave, but plan for the eventual downturn with responsible savings and investing in alternative income streams. Only Apple seems to be one of the few that can keep profit margins ultra high and beat the rest of the industry. History shows us those we though dominant forever (IBM, RIM) can still become quickly demolished by new technology and massive market shifts.

 

[OllyW]

For example: no more tangling cables, AirPods included in the box.

For us tech geeks wireless earbuds may almost look like old tech, but not for the average Joe. Especially if Apple manages to build in long battery life (>10 hours) and a male Lightning connector for on-the-fly charge, as pioneered on the Pencil.

What is now seen as a user hostile and stupid move (probably because few see Apple bundling more expensive earbuds) may well turn into a powerful selling point; and rest assured that the advertising will beat on that drum a lot.

What if they don't include your fancy wireless AirPods and bundle the cheap Lightning headphones that most people are expecting?

 

[ginkobiloba]

Expect them to slide even further after the iPhone 7 release.

 

[newyorksole]

After reading all the rumors about the new iPhone I really don't even know how thy are going to advertise it.

No headphone jack is a huge no go for many people I have talked to, myself included.

And the rumors also point to most other things staying virtually the same.
The 6S is already blazing fast so a faster processor is unlikely to convince anyone to go out and upgrade their phone either.

wht is their strategy for the new phone? Only people with yearly free upgrade plans and expiring contracts?

What am I missing?

The phone hasn't even been announced yet lmao you do realizes not every single feature leaks right?

The camera, the speed, new software that's only iPhone 7 compatible, different home button, better reception because of the antenna bands, maybe some type of water proofing...

I don't know why everyone just to such drastic conclusions about a phone that hasn't released...

 

[BreadofWonder]

It's worth noting that Apple isn't Foxconn's only customer, they do in fact assemble electronic devices for many other large tech companies.

And I wish people wouldn't keep banging on about a sales decline. Compared to a normal year, such as the iPhone 5S, the iPhone 6S sales are up. Last year was an anomaly and it will happen again if rumours about next year's iPhone are anything to go by. Everyone will rush out in 2017 and buy the latest iPhone and in 2018-2019 I can see the Apple is doomed, sales are down nonsense again. It's just the nature of the beast, we've been here before and it'll happen again.

Finally someone using some critical thinking instead of blindly repeating what they read.