Apple iPhone-maker Foxconn sees solid holiday demand despite October sales dip

Apple AAPL shares nudged only modestly higher in pre-market trading Monday after Foxconn, the world's biggest iPhone assembler, stuck to its full-year forecasts amid a surprise October sales dip.

Taiwan-based Foxconn, arguably the most important company is Apple's global supply chain, said October revenues slipped 4.6% from last year to T$741.2 billion ($23 billion) but noted 'significant' month-on-month gains ahead of the expected demand surge from both the nearly November 'Singles Day' shopping event in China and the Black Friday holiday shopping kick-off later this month in the United States.

The group, which is also facing a politically-motivated tax audit following founder Terry Gou's decision to run for president in Taiwan, added that its "significant growth outlook in the fourth quarter compared to the third quarter remains unchanged" in an statement emailed to TheStreet.

Foxconn will provide more details on its near-term outlook when it publishes formal September quarter earnings on November 14, but the optimistic tone should ease some of the investor concern linked to Apple's muted holiday revenue forecast late last week.

Apple said December-quarter sales would likely be flat to last year's $117 billion total, a forecast that fell shy of Wall Street forecasts of a 5% gain and followed the tech giant's fourth consecutive sequential revenue decline and big pullbacks in Mac, iPad and Apple Watch sales.

Group revenues were down 0.7% to $89.5 billion, just ahead of the Wall Street consensus forecast of $89.3 billion, although iPhone sales surprised to the upside with a 2.8% gain and a $43.81 billion total.

Earnings for the quarter were up 13.2% to $1.46 per share, powered for the most part by solid services revenue – Apple's widest-margin business – and a record overall total for its global installed user base. 

Another notable area of weakness in Apple's quarterly report came from China, where sales fell 2.5% from the year-earlier period to $15.1 billion amid reports that Beijing has banned the use of iPhones by government employees and state-backed enterprises in order to support the launch of state-backed tech group Huawei's new Mate 60 handset.

But Apple Chief Executive Tim Cook struck an upbeat tone on the region's prospects in his conference call with analysts, noting that a stronger U.S. dollar clipped nearly 6 percentage points from overall China sales, suggesting constant-currency growth was positive heading into the holiday season.

"Underneath that, if you look at the different categories, iPhone actually set a September-quarter record in mainland China," Cook said.

"In addition to that, we had the top four selling phones in Urban China for last year. I just took a trip over there and could not be more excited about the interactions I had with the customers and employees and others."

Apple shares were marked little-changed from Friday's closing levels in pre-market trading and indicating an opening bell price of $176.67 each, a move that would leave the stock with a modest 1.8% gain for the past six months. 

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