Everything about Apple Inc. (NASDAQ:AAPL) creates news and headlines; its latest quarterly report is no exception. The tech giant is all set to announce results for its quarter that ended in December today. The quarterly earnings report is expected to announce a few record breaking numbers and figures.
Apple Inc. downplayed facts by giving a forecast that shows sales between a range of $63.5 and $66.5 billion; whereas market analysts and experts have called for a higher estimate that totals up to a figure of $68.3 billion approximately. All will be settled today after the results come out.
The earnings report is not the only big news that has hit the internet today; just when Apple is all set to announce its record quarter, its iPhones Taiwan based assembly partner Foxconn Technology Group has announced its downsizing plans. The main reason for this downsizing is being quoted as increasing daily labor wages and reduced revenue growth.
Things could not have gotten any more interesting because Foxconn works with Apple on iPhone, which is going to be the biggest factor responsible for the expected record breaking quarter for Apple. Moreover the report may also reveal that iPhone 6 saw more sales in China than it did in the USA. With such amazing stats for the iPhone why is its assembly partner complaining of reduced growth?
Foxconn, after the workers suicide scandal labor costs have increased by double whereas the company claims its revenue growth has gone down, which has forced it to cut down its labor headcount. In 2013, revenue of the conglomerate went down to 1.3% and recovered only slight last year when it came up to 6.5%.
Eventhough Foxconn has not said anything about Apple being the main reason for this downsizing, but the tech giant cannot be taken out of the equation because it is Foxconn’s biggest client. It is believed that Foxconn plans to invest more in its business related to Apple, which means that a huge part of its revenue depends on how well the iPhone does.
When Foxconn was reached for a comment the company spokesperson called all news on the downsizing to be inaccurate. The company says that Foxconn will slow down new hiring in the next few years.
The spokesperson said that the company has not stopped hiring and still has more than a million workers across the globe. louise Woo, the spokesperson for Foxconn said that in the past three years the company did manage to stabilize in terms of work force; however when asked if the company as going to make work force cuts he simply said “yes”.
The company became quite a force in the last ten years due to a huge market for smartphones, tablets and desktop units; and with Apple Inc. (NASDAQ:AAPL) as its biggest client the Foxconn was very much riding the high wave. However things are changing now mainly due to reduced growth and prices; according to IDC smartphone growth alone will go down by half in 2015 as compared to the figure of 26% in 2014; whereas PC sales will shrink by 3%.
It is believed that the prices of modern gadgets will continue to go down in the future, which will have an impact on revenue that companies like Foxconn generates through its assembly business.
