Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Jabil Circuit (JBL) -- Ignore unavailable to you. Want to Upgrade?

To: Asymmetric who wrote (5192)	6/17/1999 2:38:00 AM
From: Asymmetric	Respond to of 6317

Another Recommendation fnews.yahoo.com

To: Asymmetric who wrote (5192)	6/17/1999 10:26:00 AM
From: kolo55	Read Replies (1) \| Respond to of 6317

Minor correction to the cc notes. Peter, my notes from the call jive with your write-up, except for the new "greenfield" site in Massachusetts. The site is actually Billercia, Massachusetts, as mentioned in the conference call. I noticed this Greenfield location has already been bandied around on Yahoo prior to your post, and lets stop this in the bud. Billercia is northwest of Boston, and contains the zips 01821 and 01862, if you want to map it on Yahoo. In my next post, I'll discuss the ramps of Dell and Nortel, and talk about JBL's relative PE. Paul

To: Asymmetric who wrote (5192)	6/17/1999 11:43:00 AM
From: kolo55	Read Replies (1) \| Respond to of 6317

I agree on REAL impact of yesterday's announcement. The Bay and Nortel programs will be really large programs, and now we are just starting to be able to gauge the impact. If the first six weeks of production for these new customer programs will generate $60M, then the first entire quarter will generate $120M, at the minimum. And given that these programs will ramp up over time, a better estimate might be over $150M in the first full quarter of production. After the first Q, the production will continue to climb! This will be a significant jump for Jabil, since the AugQ is now expected to be up only 4% or so sequentially to $540-550M. The first full Q of production for these new customers will be the NovQ, and thus revenues should jump to about $$690-700M (just based on these two new customers). If we include growth in other accounts, then $750M is quite reasonable, and if an acquisition comes, then we'll be seeing even higher revenues. In the conference call, they said they hadn't given any Q by Q breakdown guidance to the analysts for FY2000 yet. But they said they were still comfortable with current full year estimates. Once they start to see the Q breakdown, this could get interesting quickly. They expected a slight deterioration in gross margins to 10.5% next year, as some of the new programs have a higher material content. If I use the $750M revenue for the NovQ, and this gross margin, I get 41 cents a share diluted earnings. At a price of 46, the stock would trade 28 times run rate earnings. I think JBL should trade a PE premium to most of the players in the group, including Solectron. The fastest growing EMS areas are telecom and networking, and Jabil is the preferred supplier to Cisco and Nortel. This is evidenced by the Nortel news release earlier, and the fact that Cisco continues to give more business to JBL, limited only to keeping Cisco's portion of Jabil's revenues to less than 20%. And now Jabil has announced Lucent as a customer as one of "...a small select group of suppliers". (I understand the others are FLEX and CLS). These are the biggest names in telecom and networking equipment OEMs. Jabil also has Dell, the premier grower in the the PC segment. In short, Jabil should get a PE multiple premium because they have the strongest fastest growing customer account relationships. And a lot of people are hoping to buy in at lower prices... note that Keith Dunne said they were looking at re-entry point in the lower 40s. Well he shifted money to SCI from JBL when SCI was in the low 30s, and JBL was in the low 50s; now they are the same price, and I don't think he'll get the chance to buy in the low 40s, unless the whole sector cracks. From a relative valuation of the sector players, JBL looks out of kilter. These are just my thoughts and opinions. Paul