Shares of Apple (NASDAQ:
) took a light beating this morning after word leaked that
stopped all hiring
for the month of February. The manufacturer, which is responsible
for producing almost all of Apple's products, said that it would
not resume hiring until the end of March. Foxconn denied reports
that the hiring freeze was caused by a slow down in production
for the iPhone 5. Instead, the manufacturer said that it was due
to receiving too many employees after the Chinese New Year
While this may sound like the typical response of a
corporation that wants to escape any and all negative press, the
beauty of Foxconn's response is that it sounds downright
plausible. If Foxconn had said that it would not hire any new
employees this spring or that it had no idea when it would hire
again, investors would have a good reason to panic. However, it
seems unfair (if not irrational) to do so now.
No manufacturer is infallible. Even during the glory days of
American manufacturing, Ford (NYSE:
) and General Motors (NYSE:
) occasionally halted production to save a few bucks.
Foxconn produces an extremely large number of items. In
addition to iPhones and iPads, the manufacturer also produces
game systems for Nintendo (OTC:
), electronics for Sony (NYSE:
), computers for Dell (NASDAQ:
) and select items for Nokia (NYSE:
). Amazon (NASDAQ:
) and Cisco (NASDAQ:
) have also enlisted in Foxconn's services, along with
within the tech business.
Despite this, investor attention is fixated on Apple. If
Foxconn has a production issue, it absolutely must involve the
iPhone or iPad. It could not possibly have anything to do with
Nintendo's Wii U, which sold so poorly that Nintendo
dropped its sales expectations
by more than a million units. Dell experienced
last year, but there is no way that had an impact on Foxconn.
That would be impossible.
Of course, the impossible is more often "possible" than people
-- particularly investors -- realize. While Apple is closely tied
to Foxconn (it is the firm's biggest client), investors should
stop assuming that every problem the manufacturer encounters is
caused by or directly relates to an iDevice.
Those who are inclined to believe that Apple caused the hiring
freeze should remember this: Foxconn produced enough iPhones for
Apple to sell
47.8 million units
last quarter. Demand will inevitably be lower during the winter
quarter -- that is the nature of this industry. However, by
announcing that it will hire additional employees at the end of
March, it could indicate that Foxconn plans to produce a new
iDevice at that time.
That item could be the rumored iPhone 5S, the next iPad Mini
something the world has never seen before
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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