Jabil Circuit Rises After $4 Billion Marconi Contract (Update2)
By Mark Anderson
St. Petersburg, Florida, Jan. 12, (Bloomberg) -- Jabil Circuit Inc. shares rose 9.5 percent, a day after the circuit- board maker said it entered a $4 billion, three-year agreement to supply products to Marconi Plc.
Jabil rose $2.63 to $30.38. The stock rose 17 percent yesterday, after dropping 64 percent since Sept. 8.
The Marconi contract boosts annual revenue by more than 15 percent, enables Jabil to gain more business with telecommunications equipment makers and gives the company a substantial presence in Europe, Thomas Weisel Partners analyst Jim Savage said. Marconi, the U.K.'s biggest phone-equipment maker, will be Jabil's largest European customer and one of its top-three accounts.
``They're going to have tremendous momentum in their business, not just with Marconi. If you look at who their customer base is, it's Cisco, Lucent, Marconi, Sycamore, Redback, Nokia, Alcatel. They are very well positioned in the communications sector, and this just improves that positioning,'' Savage said.
St. Petersburg, Florida-based Jabil will pay Marconi, the U.K.'s biggest phone-equipment maker, about $390 million for five factories in the U.S., U.K., Germany and Italy. Jabil in turn will make printed circuit-board assemblies and other parts for London- based Marconi.
Savage raised his recommendation on the stock to ``strong buy,'' but said he is holding off revising his earnings and revenue forecasts until the Marconi contract closes in the summer.
He's calling for per-share earnings of $1.00 for fiscal 2001, ending in August, on revenue of about $5 billion. For fiscal 2002 he's calling for $1.35 in earnings per share and sales of $6.6 billion, ``and that could just as well be $8 billion when you add in the Marconi deal and further penetration of their existing customers.''
quote.bloomberg.com
I haven't followed this sector but the PRs look good at first glance.
Jack |
