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Foxconn's revenue down on slowing iPad, iPhone sales

More disappointing results ahead for Apple?

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Earnings are down at Hon Hai Precision Industry, the Taiwanese electronics manufacturing giant better known as Foxconn, leaving analysts wondering whether the slump bodes bad news for the company's biggest partner, Apple.

Foxconn's revenues for the three months ending March 2013 were 808.97bn Taiwanese dollars ($26.99bn/£17.63bn), Reuters reports, down from 1tn ($33.37bn/£21.79bn) for the same quarter last year – a 19.1 per cent decrease.

The figure missed estimates by 9.6 per cent, according to a group of analysts polled by Bloomberg – the most in four years. It was also the biggest revenue drop the company has reported since at least 2000.

Back then, the electronics market was very different. There was no such thing as an iPhone, for one thing, and Foxconn did most of its business manufacturing motherboards and other components.

In recent years, however, Foxconn's fortunes have soared, bolstered by the runaway successes of the iPhones and iPads it builds for Apple. According to Reuters, assembling Cupertino's kit now accounts for somewhere between 60 and 70 per cent of Foxconn's sales.

Such a precipitous drop in revenue, then, suggests sales of iToys are slowing, which could mean Apple investors are in for more disappointing results when the fruity firm reports its own second-quarter earnings on April 23.

Apple's share price took a beating in January when it announced its first-quarter results. Revenues were up, but not as much as analysts were hoping for, and profits were essentially flat from the year-ago quarter.

More importantly, Cupertino didn't sell as many iPhones and iPads as investors were hoping for during the holiday shopping season – this, despite the fact that overall sales had increased by double digits from the previous year's quarter.

Foxconn in the past has denied that its own financials are tied to Apple's bottom line. In February, for example, it shrugged off rumors that it had instituted a hiring freeze due to slowing iDevice production lines, saying its actions were "not related to any single customer."

But Apple shareholders can be a fickle bunch. Its stock price has plummeted from its $705-per-share peak in September 2012, despite it posting generally positive results. As we click Publish on Wednesday, Apple's shares are hovering at around $436 – but if Foxconn's disappointing sales foreshadow a similar shortfall for Apple, you can bet that price won't hold for long. ®

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