Pegatron Second-Quarter Profit Misses Analyst Estimates

Pegatron Corp. (4938), a maker of devices for Apple Inc. (AAPL) and Microsoft Corp., posted second-quarter profit that missed analyst estimates.

Net income was NT$1.39 billion ($46 million) in the three months ended June 30, the company said in statement today. That missed the NT$1.72 billion average of 14 analyst estimates compiled by Bloomberg.

Pegatron, which makes Apple’s iPad Mini and devices for Dell Inc. and Sony Corp., will supply Apple’s new low-cost iPhone, according to analysts including Arthur Liao at Fubon Financial Holding Co. The Taipei-based contract electronics manufacturer makes Surface tablets for Microsoft, which last month wrote down the value of unsold inventory and cut prices as the device struggled to lure customers from Apple.

“We think the high dependency on Apple is an increasing risk for Pegatron,” Bamboo Lin, an analyst at SinoPac Securities Co. in Taipei, said in a July 23 report.

Apple is Pegatron’s biggest customer, accounting for 27 percent of sales, followed by Asustek Computer Inc. (2357) and Lenovo Group Ltd. (992), according to data compiled by Bloomberg.

Pegatron competes with Hon Hai Precision Industry Co., the flagship of billionaire Terry Gou’s Foxconn Technology Group, to assemble devices for Apple.

Pegatron company was spun off from Asustek in 2010.

China Labor Watch, an advocacy group, last month alleged factories run by Pegatron use underage workers, pay insufficient wages and force employees to work overtime.

Pegatron Chief Executive Officer Jason Cheng and Apple both said they will investigate the China Labor Watch accusations.

To contact the reporters on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net; Cindy Wang in Taipei at hwang61@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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