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Technology Stocks : Jabil Circuit (JBL)

JBL 201.80

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Nov 14 9:30 AM EST

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To: patroller who wrote (5302)	9/19/1999 1:32:00 AM
From: Asymmetric	Read Replies (1) of 6317

An Excerpt Jabil Circuit Inc. – 15 September 1999 Q4 Results Jabil's F99/Q4 (August) earnings per share of $0.30 were up 76% from $0.17 a year ago and were in line with our expectations. Quarterly sales of $537 million were 69% higher than $318 million a year ago. Gross margin in F99/Q4 was flat sequentially at 11.4% and narrowed slightly from 11.5% a year ago from a change in product mix. SG&A as a percent of sales narrowed to 4.1% ($21.9 million) from 4.8% ($15.1 million) a year earlier as the company realized improved economies of scale. Operating income for the quarter increased about 85% to $37.8 million from $20.5 million in F98/Q4. Operating margin in F99/Q4 widened to 7.1% from 6.4% a year ago. F1999 sales of $2.0 billion were about 57% higher than $1.3 billion a year earlier. Its F1999 EPS of $1.12 were up 24% from $0.90 in F1998. Jabil had two customers that contributed greater than 10% of its sales during F1999: Cisco provided 20% of sales (about $400 million) and HP generated about 25% of sales (about $500 million). Jabil had three customers representing over 10% of sales in F1998 with Cisco at 20% (about $255 million), 3Com at 18% (about $230 million), and HP at 10% (about $130 million). We expect Cisco and HP to represent greater than 10% of sales in F2000 and think there could be one or two additional customers above this percentage. One customer that could join this level is a laptop PC customer that Jabil is completing full system build of a docking station and port replicator for. The company added Motorola and an un-named European communications company as customers in the F99/Q4. Sales to these two companies are likely to start out small, as is typical of early stage EMS programs, and we think both have the potential to become significant F2000 and F2001 customers. Acquisitions Strengthen Business Model EFTC Expands Service Offerings The recent (9/1/99) EFTC acquisition strengthens Jabil's service offerings by adding repair and warranty. The acquisition is strategic and we expect it to add about $40 million in revenue to F2000 and be accretive to F2001 EPS. GET Fills Geographic Gap and Adds Customers Jabil closed the GET pooling acquisition on September 13 for about $243 million. We expect GET to add about $250 million to F2000 revenue and be accretive to F2001 EPS. The acquisition provides Jabil with a substantial presence in China, improves its customer diversification, and increases its system assembly business. The acquisition increases Jabil's core customer base from 20 OEMs to about 30 with major customers from GET that include: · Alcatel – Telephones and telephone accessories and ADSL products · Philips – Telephone accessories · Xerox – Document home center and personal copiers · Sharp – Personal copiers Raising F2000 Estimates We think Jabil will produce F2000 sales and EPS growth of about 58% and 36% respectively based on sales growth from the two recent acquisitions and continued strength in its core business. PC and communication segment sales should grow more than 100% and 60% respectively in F2000 from F1999 based on a continued ramping of new customer programs that started in F1999 (such as the laptop PC customer) and continued momentum from existing OEM business. We are increasing our F2000 sales estimate to $3.15 billion from $2.86 billion and our EPS estimate to $1.52 from $1.48. We expect gross margins to narrow from 11.4% to 10.6% for the fiscal year due to startup costs related to the two acquisitions and its new facility in Massachusetts (expected to be operational in November). Our F00/Q1 sales estimate is 47% higher than F99/Q1 at $660 million vs. $448 million. Our F00/Q1 EPS estimate is up 32% to $0.35 from $0.26. From Merrill Lynch Report

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