Jabil Circuit (JBL) Message Board

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Technology Stocks : Jabil Circuit (JBL)

JBL 213.73

-0.6%

Nov 7 9:30 AM EST

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To: Johnny Canuck who wrote (5866)	9/22/2001 10:19:58 AM
From: Return to Sender	Read Replies (1) of 6317

More from the JBL Conference Call. I cannot vouch for 100% accuracy of these notes. I noticed some mistakes in my earlier notes. corporate-ir.net Full year 2001customers 10% or more were: CSCO 23% - Relationship remains very strong - Could be over 20% in 2002 as well Dell 14% - Notebook manufacturing will be run out this quarter - Should drop but still a customer Business Unit Revenue breakdown for 2001- Expectations for 2002 Communications: Was 52% - Expected to be 60% - Up 5 to 7 % Peripherals: Was 18% - Down 18% - Weak demand - Expected 15 to 17% Consumer Products: Was 9% - Set-Top Boxes higher margins - Up to 12 to 14% Computers: Was 16% - Down 50% - Expected to fall to 6 to 8% of mix Automotive: Was 5 to 6% of mix - Expected to be same at 5 to 6% Expectations for 2002 are based mostly on already defined revenue sources. Management expects that the current secular trend towards outsourcing by OEM's will prove to be more important than questions about end user demand in these expectations. While revenues were down 10% in 2001 margins actually improved. Business opportunities include acquisitions and OEM (plant) divestitures. Hungary and Mexico sites integration completed. PC business being lost is generally going to Asia. Not a great loss as it is a commodity business. End markets are stabilizing. The 2002 numbers are expected to add up to 75 to 80 cents. I believe that early in the call they stated expectations came from 50% already identified sources but in the Q & A management made this sound like it was coming from almost all already identified sources. They seem to feel that although Q 1 will be flat to slightly down that the end markets have stabilized enough to project these numbers with confidence. Ten percent customers in 2002 are expected to be CSCO ( Probably 20% or more ), Marconi and Intel. Others could join this list. I know LTX and an unnamed server company are included in the mix. The business they are loosing in the PC area is a lower margin business. Some of it is going to Asian manufacturers where cost is lower but quality of manufacturing is too. Some of it is simply being realigned by the OEM's to reduce the number of EMS companies they do business with while improving geographical logistics. At any rate Jabil seems to feel the loss of low margin business is hardly worth worrying over. They have actually increased margins at a time when other companies are having a difficult time maintaining profitability. There business in 2001 was geographically 50% US, 22% Latin America, 17% Asia and 12% in Europe. In 2002 that is expected to be 60% aggregate in the America's and approximately 20% each in Asia and Europe. Jabil is closing the Bedford plant. They will be integrating the Intel plant they have acquired from Intel located in Panang, Malaysia this quarter. All in all I felt it was a good call. Although they are losing some low margin business with Dell and HWP they have signed deals Agilent Technologies. They have the new set-top box program with Hughes which is higher margins. They have signed a three-year manufacturing agreement with Intel and seem to be very excited about that. Their relationship with Cisco sounds very strong. They reminded analysts that they manufacture a wide range of optical switching gear, stackable hubs, commodity routers and ATM switching gear. Demand may be down from its high points but companies are still going to need some of these products and the margins are good for JBL. My concerns are simply that the terrorist actions on Sept 11, 2001 may slow the economy more than JBL may have noted thus far. However if their expectations prove to be conservative then the stock will definitely outperform in my opinion because they have already proven that the quality of the contracts they are winning is more important than any of the business they may be losing. Higher margins are coming both from good corporate management and the quality of their manufacturing services making them a preferred provider of EMS services outside of the commodity business. RtS

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