Taiwan’s Hon Hai tumbles on Sharp approval, Q2 earnings

Shares of Taiwan’s Hon H Taiwan’s Hon Hai tumbles on Sharp approval, Q2 earnings
Shares of Taiwan’s Hon Hai Precision, the world’s biggest electronics component maker, sank to their lowest level in three weeks after it said China had approved its deal with Sharp Corp and quarterly earnings fell year-on-year.
Investors were concerned over how quickly the $3.8 billion Sharp deal would boost profits and about the sales outlook for Apple Inc’s next iPhone, of which Hon Hai is a major assembler.
There is too much uncertainty overhanging Hon Hai’s prospects,” said Eric Lin, chief investment officer of Eastspring Investments in Taipei.
“We don’t know when Sharp will return to profit and whether demand for the new iPhone 7 will be strong.”
Hon Hai, also known as Foxconn, reported T$17.7 billion ($566 million) in second-quarter net profit, 32% down on the T$25.7 billion posted in the same period last year. It did not elaborate on the reasons for the fall.
Hon Hai stocks shed 3.2% at about 0412 GMT, an intraday level not seen since late in July and lagging the broad market’s 0.2% gain.
Apple is widely expected to launch the iPhone 7 later this year, analysts have said.
In July, Sharp posted an April-June operating loss of 2.5 billion yen ($24 million) compared with a loss of 28.76 billion yen a year earlier.ai Precision, the world’s biggest electronics component maker, sank to their lowest level in three weeks after it said China had approved its deal with Sharp Corp and quarterly earnings fell year-on-year.
Investors were concerned over how quickly the $3.8 billion Sharp deal would boost profits and about the sales outlook for Apple Inc’s next iPhone, of which Hon Hai is a major assembler.
There is too much uncertainty overhanging Hon Hai’s prospects,” said Eric Lin, chief investment officer of Eastspring Investments in Taipei.
“We don’t know when Sharp will return to profit and whether demand for the new iPhone 7 will be strong.”
Hon Hai, also known as Foxconn, reported T$17.7 billion ($566 million) in second-quarter net profit, 32% down on the T$25.7 billion posted in the same period last year. It did not elaborate on the reasons for the fall.
Hon Hai stocks shed 3.2% at about 0412 GMT, an intraday level not seen since late in July and lagging the broad market’s 0.2% gain.
Apple is widely expected to launch the iPhone 7 later this year, analysts have said.
In July, Sharp posted an April-June operating loss of 2.5 billion yen ($24 million) compared with a loss of 28.76 billion yen a year earlier.