Categorized | Singapore Trading News

Foxconn Expects Dramatic Improvement in 2011, as Shares Jump

Foxconn International Holdings Ltd said it expects a “dramatic improvement” in 2011, propelling its share price to log the biggest gain in more than a year.

The money-losing company, which is due to be removed from Hong Kong’s benchmark Hang Seng Index [.HSI 23011.14 110.06 (+0.48%) ] on June 7, has been struggling under a host of problems, including rising costs and serious labor issues that led to staff suicides at its China operations. A unit of Taiwan electronics giant Hon Hai Precision Industry Co Ltd, Foxconn International has also struggled with a wave of labor unrest at its sprawling production facilities in China.

Foxconn International’s [2038.HK 4.34 0.43 (+10.97%) ] shares, which lost about 20% of their value since the start of the year, rose more than 13% on Wednesday, the biggest one-day jump since December 2009.

The company said it was banking on the fast-growing smartphones and cost cuts to improve its bottomline.

As Chairman Samuel Chin told said at a news conference on Wednesday, “Smartphones previously were a niche market. They have very much become mainstream products.”
“With regard to smartphones, as I mentioned to you before, our R&D expenses have continued to increase and I can assure you that a tremendously high amount of that expense is focused
primarily on smartphones/tablets,” he said.

Foxconn International, whose customers include Nokia [NOK 8.56 -0.05 (-0.58%) ], Motorola Mobility Holdings Inc [MMI 23.43 0.04 (+0.17%) ] and Huawei Technologies Co Ltd, logged another loss for the second half of 2010 as the company struggled to regain its footing amid rising costs and falling prices.

Chin also added that the financial results were a disappointment to the management team have taken steps to rectify the situation.

Shipments of smartphones, which allow users to surf the Internet, take pictures, and send email as well as make phone calls, are expected to grow to 97.2 million units this year, up from 55.8 million last year, as industry figures showed.

Adapted from CNBC & Reuters

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