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Reuters: Foxconn Shares See Biggest Fall in Over 9 Months
January 26, 2010 |Estimated reading time: 1 minute
TAIPEI/HONG KONG — Reuters reports that shares of cellphone maker Foxconn International Holdings Limited (2038.HK) recorded their biggest percentage fall in over 9 months after a profit warning, but many analysts remained upbeat about the firm's prospects.
A key supplier to mobile phone brands such as Motorola (MOT.N) and Apple (AAPL.O), Foxconn shares ended the day down 8.7% at HK$8.08 ($1.04), its weakest close since December 22, 2009, and its biggest one-day percentage fall since March 30, 2009.
Foxconn, a unit of Taiwanese electronics giant Hon Hai, said on Monday it expects a “significant decline” in group net profit for 2009, mainly due to a fall in demand and weak pricing.
Bonnie Chang, an analyst at Yuanta Securities who has a buy call on the stock, told Reuters that Foxconn’s shares have “climbed so much in the past couple of weeks, it's becoming increasingly apparent these gains are unsustainable.”
Separately, CLSA said in a research note that the percentage of handsets that were outsourced for manufacturing remained low at 19%, compared with over 90% for personal computers (PCs), implying better growth prospects.
Foxconn shares have risen more than 55% since the end of September, Reuters reports, as investors bet that a recovering global economy would translate into more handset sales. The company had a rough 2009, with major clients such as Nokia (NOK1V.HE) pulling back on plans to use subcontractors such as Foxconn as demand for handsets plunged. It recorded its second straight half-year loss in the first six months of 2009; and Foxconn had said then that the outlook for the tech sector remains cloudy.
Reporting by Kelvin Soh and Joanne Chiu; editing by Ken Wills, Reuters, http://www.reuters.com/
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