Hon Hai Posts Surprise Profit Drop

The transcript discusses the misconception of blaming iPhone sales for earnings issues, highlighting a 17% revenue growth in the second quarter. It emphasizes the need to analyze the P&L, particularly the cost of goods sold, which outpaced sales growth, leading to a reduced gross margin. Component pricing and currency fluctuations are identified as factors affecting costs. The discussion also covers the company's efforts to reduce reliance on Apple, despite Apple being a significant revenue source. The future outlook suggests that while challenges exist, the company may fare better than some competitors.

What is the main reason given for not blaming iPhone sales for Henghai's financial issues?

• Henghai's operating expenses were too high.

• Apple's ASP decreased.

• Henghai's revenue grew by 17%, aligning with Apple's performance.

• iPhone sales decreased significantly.

What financial metric is highlighted as having a significant impact on Henghai's earnings?

• Revenue growth

• Net profit

• Operating expenses

• Cost of goods sold

How much did Henghai's gross margin shrink by?

• 3.0 percentage points

• 1.2 percentage points

• 0.5 percentage points

• 2.0 percentage points

What percentage of Henghai's revenue still comes from Apple?

• 60%

• 50%

• 30%

• 40%

What strategy is Henghai pursuing to mitigate risks in the smartphone market?

• Focusing solely on smartphone sales

• Reducing production costs

• Diversifying its client base

• Increasing reliance on Apple