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

To: Asymmetric who wrote (5909)	1/22/2002 5:58:12 AM
From: Asymmetric	Read Replies (1) \| Respond to of 6317

Outlook turns gloomy at Jabil......................(Dec 21, 2001) (just archiving article on last earnings report: PQ) The St. Petersburg company reports an 82 percent drop in income and lowers its forecast for the current quarter. By JEFF HARRINGTON, Times Staff Writer © St. Petersburg Times ST. PETERSBURG -- Shedding its optimism, Jabil Circuit on Thursday predicted the recession plaguing tech companies will be deeper and run longer than it thought just a couple of months ago. The somber warning came as the St. Petersburg electronics manufacturer reported an 82 percent drop in its fiscal first-quarter profit and said it will miss its earnings targets for the second quarter. The company's net income of $8.4-million, or 4 cents a share, for the quarter ended Nov. 30 compares with income of $47.7-million, or 24 cents, in the year-ago period. Sales fell 22 percent to $884.6-million from $1.13-billion a year ago. Jabil pushed back its prediction of a recovery from the February quarter to the May quarter. "The recession has definitely gotten worse," chief executive Tim Main told analysts in a conference call. "On Sept. 19 (the date of the last earnings forecast), we probably shouldn't have stuck our necks out." The news and a related cut in Jabil's second-quarter earnings target sent shares in the company tumbling as much as 15 percent. The stock dropped $3.50, or 14 percent, to close at $21.25. Main said additional job cuts are expected over the next few months. He would not be specific except to note that no plants are expected to be closed. According to regulatory filings, Jabil had 17,097 full-time employees as of Aug. 31, down from 19,115 employees a year prior. Chief financial officer Chris Lewis refused to say how many of those job cuts have occurred or will occur in St. Petersburg, where the company employed about 3,000 a year ago, the last time it disclosed regional figures. Lewis said the next round of cuts, which will result in a charge of $10-million to $15-million, will be spread across Jabil's global work force. Lewis insisted that Jabil, unlike some competitors, is not trying to chop its higher-paid U.S. work force while beefing up low-cost markets in China and Mexico. "There's been no inordinate migration to low-cost areas," he said. The cuts are expected to add $4-million to $6-million in annual savings. Jabil, which makes electronic components for companies such as Cisco, Dell and Hewlett-Packard, said it noticed that the downturn was deeper than expected during an internal review this month. In the past two months, the company saw its existing customers pull back on orders by 10 to 15 percent. Clearly, the hardest-hit sector is telecom, which historically accounts for about a fourth of Jabil's revenues. Demand is off more than 50 percent and not expected to recover until next fall. Orders of so-called peripheral products such as printers are likewise slumping, off 28 percent in the last quarter. Reiterating a common theme, Main said the company remains in the hunt for more acquisitions and is in talks with some undisclosed companies. A delay in an economic rebound is particularly troubling given Jabil's current contract situation. The company is winding down a major job assembling electronic notebooks for Dell and it was hoping for new business to pick up the slack. Still, Jabil has done better than most in solidifying relationships as many of the top electronic companies pare down their vendor lists. Jabil was named a "preferred provider" for some Hewlett-Packard and Cisco products and picked up new IBM business. The problem is that the Ciscos of the world have cut back so much on orders that preferred provider status isn't paying off for Jabil -- yet. "There apparently is some gamesmanship going on," said Shawn Severson, an analyst with Raymond James in St. Petersburg. "The customers are seeing just how low their inventory can go." Once they do start reordering, Severson said, Jabil will be in a strong position. According to Jabil, that won't be any time soon. For the second quarter, the company forecasts revenue will be flat at $800-million to $850-million, with earnings between 6 cents and 8 cents a share. For the fiscal year, it predicts net income of 50 cents to 60 cents, with revenues of $4-billion at best. "With $3.5-billion to $4-billion in revenue expected, we're clearly not counting on a very strong recovery," Main said.