Foxconn shares declined 3.9 percent to HK$19.46, the lowest close since Aug. 24, 2006. The Shenzhen, south China-based company Tuesday reported first-half profit rose 7.4 percent to US$324 million, missing the median estimate of US$370 million of three analysts surveyed by Bloomberg.

The company’s earnings fell after sales slumped at Motorola Inc., its biggest customer. Foxconn, the worst-performing stock on the Hang Seng Index this year after it doubled in 2006, seeks more orders from Nokia Oyj and Sony Ericsson Communications Ltd. to cut its reliance on the U.S. company.

“Foxconn needs to diversify by exploring new markets” to lower its reliance on Motorola, said Ben Kwong, head of research at KGI Asia Ltd. “It’s quite a tough task in the short term.”

Schaumburg, Illinois-based Motorola posted a second straight quarterly loss in the three months ended June after the company’s new products failed to repeat the success of the Razr, its best-selling model. Its handset sales fell to 35.5 million phones in the second quarter, from 51.9 million a year earlier.

Motorola’s share of Foxconn’s sales may drop to 37 percent this year from more than 53 percent last year, UBS AG analyst Arthur Hsieh wrote in a June 15 report. Nokia, the world’s largest mobile-phone maker, may account for 45 percent of Foxconn’s revenue this year, up from 40 percent in 2006, he said.

Espoo, Finland-based Nokia reported last month that second-quarter profit more than doubled to 2.83 billion euros (US$3.9 billion) as sales grew at the fastest pace in five quarters.

“Foxconn is effectively diversifying its client portfolio,” Hsieh, who has a “buy” rating on the stock, wrote in a report yesterday. The analyst cut his 12-month target price on Foxconn to HK$25 from HK$26.40 after the company’s first-half profit missed his estimate by 14 percent.

Foxconn, a unit of Taiwan’s Hon Hai Precision Industry Co., was added to Hong Kong’s benchmark index Sept. 11 last year. The stock rose by 101 percent in 2006 and has fallen 24 percent this year. The Hang Seng index has risen 22 percent this year.

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