Foxconn founder keeps investors in the dark, happy for now

Foxconn founder Terry Gou has a vision of how to rewire the Taiwan firm that builds iPhones to cut dependence on Apple, the client around which he built a US$46 billion tech empire. Just don't expect him to tell anyone exactly what it is.

With the latest version of Apple's smash hit smartphone having catapulted first-quarter profit 55 per cent higher, investors have sent shares in Hon Hai Precision Industry - Foxconn's flagship - rising towards the historic highs hit eight years ago that give it its lofty market value.

Within two years, though, analysts expect annual iPhone shipments growth to slow to a fraction of 2012's boom. If few question Gou's management savvy, investors say they're stuck in the dark on broad-brush plans to diversify into new tech like electric cars and robots, as well as waiting to hear how he intends to make good on pledges to crack new markets like India, Brazil and Indonesia.

That's how Gou prefers it, he explained at his once-a-year reckoning with investors in last month's annual general meeting. "I have a lot of the information they want," he said, referring to big foreign institutions, which make up 48 per cent of Hon Hai's shareholders, "but I insist on not making it public."

Gou's business instincts have served him well, building the world's biggest contract maker of electronic gadgets from scratch more than 40 years ago. Yet at 64, the chairman and chief executive's maverick approach to transparency also stretches to lack of precise word on succession plans, leaving company watchers trusting his skills but wondering what kind of business Hon Hai will become, and who will run it in future.

Sovereign wealth funds from Norway, Singapore, Saudi Arabia and Abu Dhabi rank among Hon Hai's top 10 shareholders - and Gou himself is the biggest single investor with a direct 12.5 per cent stake, making him one of Taiwan's richest men. But Gou said sharing information with them would be unfair to the army of retail investors who own nearly 40 per cent of Hon Hai, outnumbering foreign shareholders 220 to 1.

"He doesn't tell you 'this'. He doesn't tell you 'that'. Nothing you can do about it," said Andrew Yang, head of Taiwan investments at Manulife Asset Management, which regularly buys Hon Hai shares. "If [Gou] can deliver results, then all you can do is believe he has competitiveness."