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Hon Hai reported a 19 percent sales decline for Q1 2013 compared to Q1 2012

Hon Hai Precision Industry Co. saw an unexpected yearly decline in the first quarter of 2013 thanks to shrinking demand for Apple's iPhone. Hon Hai reported a 19 percent sales decline for Q1 2013 compared to Q1 2012. While analysts were expecting quarterly decline from Q4 2012, they didn't see the yearly decline coming.

Hon Hai posted sales earnings of T$808.87 billion ($26.96 billion USD) for the quarter ended March 2013. This was a drop from T$988.34 billion in Q4 2012 and a further decline from T$1 trillion in Q1 2012. 

Hon Hai, which collects about 60 to 70 percent of its revenue from the iPhone and iPad, saw a decrease in sales due to low demand for the iPhone in particular. 

Apple has hard a hard time keeping up the momentum of its products, and it shows in the company's shares. Shares have fallen from $702.10 in September to $426.98 as of today. Also, Apple's iPhone only represented about 19 percent of worldwide smartphone shipments in 2012 while all Android-powered smartphones accounted for about 70 percent.

Android will even beat Apple in the tablet sector this year, according to a new report from IDC. IPad shipments are expected to make up 46 percent of the tablet market for 2013, down from 51 percent in 2012. Android-powered tablets are expected to increase their market share to 49 percent in 2013, up from 42 percent in 2012.

Samsung is a particularly strong competitor to Apple as far as Android-powered devices go. We even saw a bit of fear in Apple as Phil Schiller (Apple's senior vice president of worldwide marketing) talked trash about Android on the eve of the Samsung Galaxy S IV release. 

Samsung is even racing Apple to make a wearable device this year -- much like a smart watch -- and has plans to trump Apple's new spaceship campus with a more impressive headquarters in the U.S.

Source: Reuters

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RE: Lack of Apple innovation
By TakinYourPoints on 4/10/2013 8:10:19 PM , Rating: 2
Hardware profit margins are much lower than software profit margins. It took more than a doubling of Apple's gross revenue to match Microsoft's net profit.

RE: Lack of Apple innovation
By Tony Swash on 4/10/2013 8:26:22 PM , Rating: 2
Hardware profit margins are much lower than software profit margins.

I am not sure that's strictly true anymore as far as Apple is concerned.

By TakinYourPoints on 4/10/2013 8:47:38 PM , Rating: 4
That number is variable, it really depends. Apple's profit margins tanked year-over-year with the release of the iPhone 5. It's why they made the same net profit for the 2012 holiday quarter despite a huge increase in sales and gross revenue.

Foxconn's share of the profit is also increasing, which is obviously digging into Apple's margins:

Fourth-quarter net income climbed 5.6 percent to NT$37 billion ($1.2 billion), according to data compiled by Bloomberg based on full-year results published yesterday. That’s ahead of the NT$35.9 billion average of 14 analyst estimates compiled by Bloomberg.

“As they scaled up production of the iPhone and solved production bottlenecks, Hon Hai’s profit margins improved and they may have had some room to push Apple for better pricing,” said Vincent Chen, who rates the stock buy at Yuanta Financial Holding Co. in Taipei.

We'll see for sure when Apple released sales in two weeks. Its all speculation and link bait at this point. Here's another story that is relevant given that Foxconn produces OEM PCs and components for pretty much everyone:

Worst PC sales drop in history, 14%. Dell and everyone is quick to jump on blaming Windows 8 for their troubles, but I don't think that's so simple. PCs last much longer than they used to and everybody has one. The time of bi-annual upgrades for consumers is over, that's all. I'm a hardcore PC gamer with a 2560x1440 display, and even I've been able to hang onto most of my 2009 i7 for three and a half years (GPU is the only upgrade I made a year ago). Even more people are happy hanging onto their Core Duos and Quads, hence the decline in PC sales.

We're nowhere near a ceiling for smartphone or tablet sales yet, that's the difference.

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