Just when we thought we've gotten the first confirmation that "iPhone" is in the works, here comes news that would put the phone back in the "mystery files" folder.

Hon Hai Precision Industry Co. (a.k.a Foxconn International) has won a contract that will have the company manufacture Macbooks and, to quote Forbes.com, "12 million mobile handsets that also function as music players".

We did warn about a possible mistranslation from the original source, and that the mobile handsets could probably be just MP3 players. We didn't put much thought about it until Hon Hai declined to comment on the announcement, saying that it doesn't respond to "market rumors". So, there goes our supposed confirmation.

And to keep the iPod phone shrouded in mystery,a Foxconn spokesman said that the company provides mobile phone manufacturing services to Motorola and Nokia Ojy. He added that Apple is not one of Foxconn's existing customers (in the mobile phone business, that is).

Now, we're back to where we started from. The best thing to do? What we usually do. Wait.

Foxconn International Holdings, Shenzhen-based iPod manufacturer, has dropped its libel claim against two Shanghai journalists and their newspaper, the China Business News. The suit was filed following reports from the said paper that the Taiwanese firm was allegedly mistreating their workers at the plant. The June 15 report said that the company was violating workers' rights by forcing them to work overtime for low pay.

The libel suit proved to be controversial, as it was deemed to be one of the biggest defamation cases filed in China against reporters, and had sparked concern about journalists' rights. Even Apple had to step into the picture by releasing a statement last month that Foxconn did let employees at the China plant work longer hours than allowed by Apple's code of conduct, and that it had taken steps to address the issue.

The settlement was made as both parties apologized to each other for the trouble caused by the lawsuit. They also signed a joint agreement where both sides agreed to cooperate to protect workers' rights.