Major contract manufacturer Foxconn Technology Group — which counts Apple, HP, Dell, Nokia and Motorola Mobility among its major clients — last week raised wages for its workers in China by 16-25 percent, the third hike since 2010.

The wage increases reflect a rising trend across the Chinese electronics manufacturing industry and could pressure already wafer-thin margins at the likes of HP and Dell.

HP Chief Executive Meg Whitman said rising wages in China could eventually have a ripple effect across the world electronics industry.

“If Foxconn’s labor cost go up, their product cost to us will go up,” she told Reuters in an interview on Wednesday.

“But that will be an industry-wide phenomenon and then we have to decide how much do we pass on to our customers versus how much cost do we absorb.”

Dell, which on Tuesday reported a 18 percent slide in quarterly profit, said it was also keeping an eye on wages in China.

“It’s not clear to us how that will play out in terms of our costs,” Dell Chief Financial Officer Brian Gladden told Reuters. “It remains to be seen how that flows through the overall supply chain. We will continue to watch that.”

But Gladden said labor costs are a “very, very small piece” of the total cost of its products.

To companies like HP and Dell that specialize in creating ultra-efficient supply chains and cutting costs to preserve razor-thin profit margins, any rising expense can be trouble.

“HP and Dell’s PCs could cost a bit more. Those companies have been trying to pass on extra costs. It may or may not work. Their products aren’t as differentiated as Apple’s,” said Shaw Wu, an analyst at Sterne Agee in San Francisco.

Apple’s main manufacturer of iPads and iPhones, Foxconn is already in the spotlight because of its poor labor conditions, with reports of employees committing suicide.

The Foxconn wage hike came days after Apple said a U.S. non-profit labor group had begun an “unprecedented” inspection of working conditions at its main contract manufacturers, including Foxconn.

Foxconn’s wage increase comes as Chinese electronics manufacturers face higher costs to attract workers.

The government of Shenzhen, a freewheeling boomtown bordering Hong Kong, announced in January it was increasing its minimum wage by 13.6 percent despite warnings from factory owners the move could deal another blow to exporters already reeling from a sharp drop in Western orders.

Taiwan-based Foxconn said the pay of a junior level worker in Shenzhen, southern China, had risen to 1,800 yuan ($290) per month and could be further raised above 2,200 yuan if the worker passed a technical examination. It said that pay three years ago was 900 yuan a month.

(Reporting By Noel Randewich; Editing by Michael Perry)

The storied Silicon Valley company, which has been trying to move past the internal upheaval that marked 2011, posted quarterly sales declines in three of its key units: personal computers, printers and enterprise equipment.

Chief Executive Meg Whitman, a veteran Silicon Valley executive who took the top job last September after the firing of Leo Apotheker, has been trying to turn around HP’s sprawling businesses. On Wednesday, she pleaded for a little patience.

“If you look at business history and you look at companies which have gone through the kind of turnaround that we’re leading HP through right now, these things are not quick,” she said, adding it could anywhere from two to five years.

“It took us a while to get into the situation in which we find ourselves. It’s going to take us a little while to get out.”

Last year was a turbulent one for the company, marked by strategy flip-flops, executive churn and the ouster of Apotheker after less than a year in the top job.

NO BRIGHT SPOTS

Fiscal first-quarter revenue fell 7 percent to $30 billion, slightly below Wall Street’s consensus estimate.

Sales from the personal systems group, encompassing PCs, declined 15 percent, which executives blamed partly on a persistent shortage of hard drives globally – the result of flooding last year in Thailand.

Revenue from its bread-and-better printing group – which Whitman called the “lifeblood” of the company on Wednesday – fell 7 percent, hurt by weak consumer demand as the U.S. economy continued to struggle.

Even sales of enterprise servers, storage and networking equipment – usually a bright point for HP – fell 10 percent.

On Wednesday, HP reported net income of $1.47 billion for the fiscal first quarter, or 73 cents a share, down from $2.6 billion, or $1.17 a share, a year earlier.

Excluding items, HP earned 92 cents a share, above the average analyst estimate of 87 cents according to Thomson Reuters I/B/E/S.

Looking to the current, fiscal second quarter, HP said it expects non-GAAP diluted earnings of 88 to 91 cents a share, below Wall Street estimates.

It reiterated its full-year non-GAAP earnings outlook of at least $4 per share.

HP shares slid to around $28.65 in after-hours trading. They shed 1.39 percent in the regular session to close at $28.94 on the New York Stock Exchange.

(Reporting By Poornima Gupta; editing by Richard Chang and Andre Grenon)

The storied Silicon Valley company, which has been trying to move past the internal upheaval that marked 2011, posted quarterly sales declines in three of its key units: personal computers, printers and enterprise equipment.

Chief Executive Meg Whitman, a veteran Silicon Valley executive who took the top job last September after the firing of Leo Apotheker, has been trying to turn around HP’s sprawling businesses.

Last year was a turbulent one for the company, marked by strategy flip-flops, executive churn and the ouster of Apotheker after less than a year in the top job.

On Wednesday, HP reported net income of $1.47 billion for the fiscal first quarter, or 73 cents a share, down from $2.6 billion, or $1.17 a share, a year earlier.

Excluding items, HP earned 92 cents a share, above the average analyst estimate of 87 cents according to Thomson Reuters I/B/E/S.

Revenue fell 7 percent to $30 billion, slightly below Wall Street’s consensus estimate.

Sales from the personal systems group, encompassing PCs, declined 15 percent while revenue from its bread-and-better printing group fell 7 percent, hurt by weak consumer demand.

Sales of enterprise servers, storage and networking equipment – usually a bright point for HP – also fell 10 percent.

Looking to the current, fiscal second quarter, HP said it expects non-GAAP diluted earnings of 88 to 91 cents a share, below Wall Street estimates.

It reiterated its full-year non-GAAP earnings outlook of at least $4 per share.

HP shares slid to around $28.65 in after-hours trading. They shed 1.39 percent in the regular session to close at $28.94 on the New York Stock Exchange.

(Reporting By Poornima Gupta; editing by Richard Chang and Andre Grenon)

The storied Silicon Valley company, which has been trying to
move past the internal upheaval that marked 2011, posted
quarterly sales declines in three of its key units: personal
computers, printers and enterprise equipment.

Chief Executive Meg Whitman, a veteran Silicon Valley
executive who took the top job last September after the firing
of Leo Apotheker, has been trying to turn around HP’s sprawling
businesses.

Last year was a turbulent one for the company, marked by
strategy flip-flops, executive churn and the ouster of Apotheker
after less than a year in the top job.

On Wednesday, HP reported net income of $1.47 billion for
the fiscal first quarter, or 73 cents a share, down from $2.6
billion, or $1.17 a share, a year earlier.

Excluding items, HP earned 92 cents a share, above the
average analyst estimate of 87 cents according to Thomson
Reuters I/B/E/S.

Revenue fell 7 percent to $30 billion, slightly below Wall
Street’s consensus estimate.

Sales from the personal systems group, encompassing PCs,
declined 15 percent while revenue from its bread-and-better
printing group fell 7 percent, hurt by weak consumer demand.

Sales of enterprise servers, storage and networking
equipment – usually a bright point for HP – also fell 10
percent.

Looking to the current, fiscal second quarter, HP said it
expects non-GAAP diluted earnings of 88 to 91 cents a share,
below Wall Street estimates.

It reiterated its full-year non-GAAP earnings outlook of at
least $4 per share.

HP shares slid to around $28.65 in after-hours trading. They
shed 1.39 percent in the regular session to close at $28.94 on
the New York Stock Exchange.

(Reporting By Poornima Gupta; editing by Richard Chang and
Andre Grenon)

((poornima.gupta@thomsonreuters.com)(415 677 2536)(Reuters
Messaging: Follow me on Twitter @PoornimaGupta))
Keywords: HP/

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the Reuters group of companies around the world.

But as he gears up for the annual face-to-face meeting with shareholders, a few issues may be causing him angst. Chief among them are in China, where poor labor conditions are in the spotlight and Apple’s iPad trademark is under attack.

The meeting this Thursday comes days after Apple touched a new lifetime high of $526.29 before receding slightly. The stock may get a boost next month, when Apple is expected to unveil a new version of its best-selling iPad.

Apple shares have seen a blistering rally in the past seven weeks, gaining $100 and making Apple the most valuable U.S. company, with $468 billion in market capitalization.

But as much as Apple’s shares rally, working conditions at the company’s manufacturing contractors in China have also attracted attention this year.

Recently, Apple has been trying to redirect the spotlight on its efforts to force its partners to treat their employees better and the iPhone and iPad maker may use Thursday’s meeting to repeat it commitment to improve labor conditions in its supply chain.

“The Fair Labor Association and the audit they are doing of all their (supply) firms is a corporate governance issue that will probably be a reasonably active discussion at the shareholder meeting,” said Tim Lesko, portfolio manager at Granite investment Advisors. Apple share account for about 3 percent of Granite’s equity assets.

The U.S. non-profit labor group Fair Labor Association has begun a study of the working conditions at Apple’s main contract manufacturers, including supplier Foxconn Technology Group’s plants in China, which has been in the news for worker suicides, a plant explosion and poor working conditions.

Another thorny issue that has now started attracting attention from shareholders is the trademark battle moves in China where troubled technology company Proview is seeking to halt the sale of iPad tablets, claiming it owns the iPad trademark in china.

Connor Browne, portfolio manger of Thornburg Value Fund — another Apple investor — wants to see the trademark case settled.

“Apple has positioned itself well in China,” he said. “I would hate to slow the momentum there because of court issues.”

CASH TO COME UP AGAIN

A perennial issue that shareholders zoom in on is Apple’s enormous cash pile. The company now boasts of over $100 a share in cash and securities.

Cook said earlier this month that the company is in very active discussions at the board level about what to do with its cash, asking shareholders to be patient as Apple decides the way forward, stoking speculation that Apple may return some of that money to shareholders through dividends or share buybacks – even if it is only a one-time deal.

Apple’s cash balance is the largest among U.S. technology companies, and many analysts think the company should put at least some of the money to work. The company last bought back shares in 2001 and scrapped its dividend in the mid 1990s.

A dividend could give Apple stock a short-term boost as institutional investors – who typically own only stocks that pay dividends – may buy it.

“It certainly would increase the potential owners for the stock,” Lesko said.

Apple’s annual meeting rarely yields any financial forecasts or product-related news but corporate governance could be part of the discussion.

Last year, in a rare show of strength, Apple shareholders voted for a non-binding proposal to require board directors be elected with a majority vote but Calpers, which put it forward, is reintroducing the measure as Apple has not acted on it.

The largest U.S. pension fund says that policy would better protects investors’ interests but Apple had urged shareholders to vote against the proposal.

The company’s board has long been criticized for its lack of disclosure, particularly about leadership succession while Steve Jobs battled illnesses whose details were not made public.

(Reporting By Poornima Gupta; Editing by Phil Berlowitz)

The world’s No. 3 personal computer maker projected sales would be down 7 percent this quarter from the previous quarter, when it posted revenue of $16 billion. That translates into about $14.9 billion, below the average forecast for roughly $15.2 billion.

Dell’s fiscal fourth quarter earnings also came in below Wall Street’s view as strength in its corporate business unit was offset by weakness in the division that caters to public businesses.

Investors were disappointed by the “lack of the upside in the quarter as well,” ISI Group analyst Brian Marshall said. “It’s going to take a little bit of time for Dell to turn around the tanker ship.”

“They have $65 billion revenue and it takes a long time to move the needle to more strategically relevant revenue sources and we are just not seeing signs of progress yet,” he said.

PC makers have grappled with slackening demand as mobile devices such as Apple Inc’s iPad erode market share, while a shortage of hard drives after flooding in Thailand crimped supply.

Revenue in Dell’s fiscal fourth quarter was up 2 percent at $16 billion, in line with the average analyst estimate of $15.96 billion according to Thomson Reuters I/B/E/S.

The company posted a net income slide of 18 percent to $764 million, or 43 cents a share, for the period, down from $927 million, or 48 cents a share, a year earlier. Excluding one-time items, it earned 51 cents a share, a penny below the 52 cents expected.

ENTERPRISE BUSINESS SHINES

For fiscal 2013, the company said it expects non-GAAP earnings per share to exceed $2.13.

Dell’s large-enterprise business held up well, increasing sales 5 percent in the quarter to $4.9 billion, as corporations continued to upgrade aging hardware.

Chief Financial Officer Brian Gladden told Reuters that he expects business spending in Dell’s enterprise unit to continue to be strong this quarter.

Dell’s public business generated revenue of $3.9 billion, which was down 1 percent from a year ago due to weakness in the United States and Western Europe while Dell’s sales to consumers fell 2 percent over the same period.

Dell’s gross margin rose to 21.1 percent from 20 percent a year earlier.

The shares of Dell, which vies with market-leading Hewlett Packard Co, slid to $17.34 in extended trading after closing on Nasdaq at $18.21.

(Reporting By Poornima Gupta; editing by Richard Chang and Andre Grenon)