Hon Hai Precision Industry Co. recently made a purchase of 4.9 percent share in SK C&C Co. The Foxconn Technology Group unit, the largest in the company, is still looking to expand further.
Hon Hai spent $377 million or 381 billion won for all the stocks from SK Holdings Co. That's about 155,00 per share, according to Chairman Chey Tae-won. The Taiwanese multinational electronics seems to be bent on venturing into automation, cloud computing, as well as, electric cars. This could mean Foxconn no longer wants to depend on Apple as its main buyer or maybe the company still wants to grow.
Foxconn's new business opportunities are expected to bring more revenue to the company. At present, about half of its sales are all from Apple. Nothing wrong with that but Foxconn could only be reaching for higher grounds.
SK C&C is also in the business of mobile devices. It's more known for electronic payments and mobile software in South Korea. It holds a 31.8 percent shared in SK Holdings, the bigger group that manages SK Telecom Co.
SK C&C Co. isn't the only company Hon Hai is planning to acquire shares from. It is also interested in investing on Asia Pacific Telecom Co., another telecom based in Taipei. It was announced last May that Foxconn Technology Group's Hon Hai will spend $390 million or T$11.6 billion on shares in the Asia Pacific telecom but the deal has not been finalized yet.
Hon Hai's shares went up by 1.4 percent after the news was released. That's T$100, considered as a multi-year highest intraday level according to a Reuters report. Meanwhile SK C&C also went up 4.8 percent after the deal was announced to the public.
Future growth in earnings for the companies is naturally expected. In fact, analysts are noticing the move of Hon Hai. AUBS Securities Pte Ltd electronics hardware analyst, Arthur Hsieh, thinks "2014 could be the best year for Hon Hai." In contrast, he also expressed caution because the firm's forecast on Hon Hai's revenue would only grow 4.4 percent as opposed to Terry Gou's 10 percent prediction.
Hon Hai's Chairman Terry Gou could only be optimistic about his company but his corporate plans aim to make the Foxconn unit into a technology-service provider instead of hardware manufacturer. UBS' Hsieh is 'concerned about the outlook' of the company given the new business model presented by Gou.
