Foxconn profit drops after tough economy, better-paid staff
updated 01:45 pm EDT, Mon October 31, 2011
Foxconn reports third-quarter loss of profit
Hon Hai Precision Industry, the parent company of Foxconn and the largest contract maker of electronics, has just posted its fourth consecutive drop in profits. Foxconn manufactures multiple electronics devices for companies like Apple, Amazon, Dell, HP, Sony, and numerous others. Third-quarter net income dropped 8.6 percent to $641 million, the company revealed, which is a decrease from the $701 million in the same time period in the previous year.
Hon Hai suffered from a lethargic economic recovery that saw a low demand for computers and game consoles. The margins are expected to improve during the fourth quarter thanks to the release of the iPhone 4S and declining costs as a new factory is being set up, said Kirk Yan from Barclays Capital in Hong Kong.
Last year, Foxconn raised wages for its workers after suicides at its factories were reported, and these larger expenses also contributed to the lower profits.
Unconsolidated sales that don't reflect revenue from subsidiaries saw a non-significant change from the same time period last year, at the equivalent of $22.3 billion.
Hon Hai employs about one million workers and is moving factories more inland in China to be closer to those workers. It is also expanding its plant in Brazil. Its global shipments, meanwhile, climbed 3.2 percent in the third quarter from a year earlier. [via BusinessWeek]
Fresh-Faced Recruit
Joined: Sep 2009
Oh no!
This must mean they need to clamp down on all those underpaid employees! Profits are king! The CEO won't get as big of a bonus. Something must be done!!!