Hon Hai Drops Amid Concern IPhone Orders May Have Peaked

Hon Hai Precision Industry Co. slumped by the most in almost three months in Taipei trading, a day after reporting record profit, amid concerns that orders for Apple Inc. devices may have peaked.

The assembler of electronics including the iPhone and iPad fell 2.6 percent, the most since Jan. 6, to NT$91.60 at the close of trading in Taipei.

Apple’s orders may wind down as it transitions to a new model, Kirk Yang and Aaron Wu, analysts at Barclays Plc, wrote in a report dated Tuesday. There is also a “downside bias” for Hon Hai sales as rivals including Pegatron Corp. may win iPhone orders at the company’s expense, they wrote.

About half of Hon Hai revenue comes from Apple, which itself reported record profit after introducing the iPhone 6 and retaking the lead in global smartphone sales. Orders from other customers at the biggest company in Terry Gou’s Foxconn Technology Group have been weaker, with sales missing the billionaire chairman’s target for 10 percent annual growth.

Apple has added Quanta Computer Inc., Pegatron, Wistron Corp. and Compal Electronics Inc. for assembly, according to its annual supplier report. Hon Hai used to be the only company making iPhones and iPads for Apple.

Hon Hai accounted for about 85 percent of iPhone assembly last year, which could drop to 65 percent this year, according to estimates by UBS AG.

Quarterly Profit

Fourth-quarter net income climbed 33 percent to NT$56.7 billion ($1.8 billion), according to figures derived from full-year results filed to the Taiwan Stock Exchange on Monday. That compares with the NT$50.5 billion average of 15 analysts’ estimates compiled by Bloomberg.

Sales last quarter, announced in January, climbed 13 percent to NT$1.5 trillion, beating the NT$1.4 trillion average of analyst estimates at the time. Operating profit for the period also beat analyst estimates.

Full-year sales climbed 6.6 percent to NT$4.21 trillion, less than the 10 percent growth Gou pledged in June. Net income for the year climbed 22 percent to NT$130.5 billion.

Apple in 2013 accounted for 51 percent of Hon Hai’s sales, according to the Taiwanese company’s annual report. The global market share of iPhones climbed to 20.4 percent in the fourth quarter from 17.8 percent a year earlier, reclaiming the top spot from Samsung Electronics Co. for the first time since 2011, according to Gartner Inc.

Before it's here, it's on the Bloomberg Terminal.