Foxconn’s Gou Urges Patience as IPhone Maker’s Sales Slow
Foxconn Technology Group (2317) Chairman Terry Gou asked shareholders to give him time to invest in new businesses including car electronics and cloud computing as he chases clients such as Tesla Motors Inc. (TSLA) amid slowing sales.
“Please be patient, don’t be in a hurry,” Gou said today at the annual meeting of Hon Hai Precision Industry Co., Foxconn’s largest unit. “I’m also the biggest shareholder, so if it’s bad for Hon Hai it’s also bad for me.”
Foxconn, the key iPhone manufacturer for Apple Inc. (AAPL) and China’s largest private employer, also plans to boost investment in robotics and add more high-skilled positions as Gou strives to meet his goal for profit growth of 10 percent. Foxconn’s founder has met with executives including Tesla’s Elon Musk, SoftBank Corp. (9984)’s Masayoshi Son and Alibaba Group Holding Ltd.’s Jack Ma to discuss future cooperation.
Foxconn plans to hire at least 15,000 people in Taiwan to increase its research base with positions that won’t replace Chinese manufacturing jobs, Gou said March 12. The jobs, which include 5,000 at the company’s Taipei headquarters, will be for research-and-development and next-generation technologies, he said.
Hon Hai shares fell 1.7 percent to NT$96.50 in Taipei trading, curbing its gain to 20 percent this year. The benchmark Taiex index has advanced 7.3 percent.
Tokyo-based SoftBank on June 5 unveiled its emotion-reading robot called Pepper, which will be manufactured by Foxconn. Musk told Tesla shareholders this month that his company is increasing cooperation with Foxconn, and Gou said today that Foxconn makes touch screens for Tesla cars.
“There’s some very promising potential collaboration with Foxconn,” Musk said June 3. “We do feel that with potential alliances like Foxconn, we could potentially expand our production faster than would otherwise be the case.”
Foxconn plans to make electric cars for $15,000 each and currently has many electric-car battery clients, he said.
Gou also said today he sees Foxconn -- a maker of phones, computers and video-game machines for companies worldwide -- landing Facebook Inc. (FB) as a client. He didn’t elaborate.
As the sole chairman and chief executive officer since Foxconn was founded in 1974, Gou has retreated on pledges to retire and appoint a successor. The 63-year-old’s most recent plan is to train as many as 30 company presidents as part of a long-term succession plan.
Hon Hai should be more transparent about its future strategy, financial results and the qualifications of its directors, said Hans-Christoph Hirt, Singapore-based executive director at Hermes Equity Ownership Services.
Hermes represents investors holding shares worth about $1 billion, Hirt said.
“Maybe we have different expectations and maybe I cannot meet your requirements,” Gou said in response. “We are a product company with secrets” to protect.
He also promised at least 10 percent revenue growth this year while maintaining an internal target of a 15 percent average annual increase.
Hon Hai posted a 1.2 percent increase in revenue last year to NT$3.95 trillion ($132 billion), missing Gou’s target. Net income climbed 13 percent to a record NT$107 billion as Foxconn boosted non-operating profit including foreign-exchange gains.
Shareholders today passed a board resolution to pay a cash dividend of NT$1.80 per share for 2013 and a stock dividend of 12 percent.
Apple, which outsources assembly of iPhones and iPads to Foxconn, accounts for about 48 percent of Hon Hai’s revenue, according to Bloomberg Industries.
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