I just spent 30 minutes calculating the implications of the Foxconn wage increases on the price of Apple stock:
With no change in yearly income and a decrease from 60 overtime hours per month to 36, wage is essentially increasing 13.7%. Applying this to iPad (which accounted for 26% of Apple revenue in Q4 2011), manufacturing cost on the 16GB Wifi model (the one with the lowest margins) was $10. Therefore apple is losing $1.37 per iPad @ 65M expected to ship in 2012 = $90M. Distribute this across all devices, we are talking a maximum of $330M loss in 2012, or just over 1% of the $26.5B in profits expected for 2012.
What I’m trying to say is a 2.5% decrease in stock due to Fonxonn wage adjustments is an overreaction.