U.S. News

Motorola Warning Hits Asian Phone Parts Makers


Shares in some Asian mobile phone contract makers and parts suppliers fell on Thursday after Motorola warned of a quarterly loss and said its 2007 outlook was "substantially" worse than expected.

Foxconn International Holdings of Hong Kong, which makes Motorola phones, South Korean parts maker Mogem and Singapore's contract electronics maker Jurong Technologies Industrial were among the losers.

But rival mobile phone makers such as Samsung Electronics and LG Electronics rose as they were expected to benefit from Motorola's underperformance.

"Motorola contributes 45% of Foxconn's total revenue. Given the big exposure to the top phone company, it'd be a big drag. Revenue will be hurt and margins could come under pressure," said Charles Guo, a JP Morgan analyst.

Motorola has struggled with sharply sliding phone prices as it tried to hold on to its market share despite stiff competition in emerging markets and from industry leader Nokia.

Foxconn, the mobile phone arm of Taiwan's Hon Hai, dropped over 2% in the afternoon session, compared with Hang Seng Index's 1.21% gain.

South Korea's Mogem was also down over 2% compared with gains in the Kosdaq market. The company provides casings and decorations for Motorola phones.

In Singapore, Jurong Technologies, which makes battery packs and PCB assembly for Motorola, lost over 1%, against a 2% gain in the Straits Times Index.

Meanwhile, Samsung Electronics, the world's third-biggest mobile phonemaker, and fifth-ranked LG Electronics, were higher. Their gains were in line with other South Korean exporters whose shares rose on hopes the Federal Reserve would cut U.S. interest rates, boosting exports to the U.S. market.