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

To: Frank Drumond who wrote (4389)	7/30/1998 6:25:00 PM
From: Asymmetric	Respond to of 6317

Jury agrees: Grease harmed Jabil laptops A St. Paul, Minn., company is ordered to pay $8.9-million plus interest for selling the electronicsmaker a damaging lubricant. By ERIC TORBENSON c St. Petersburg Times, published July 29, 1998 AMPA -- Jabil Circuit Inc. won an $8.9-million judgment Tuesday against a supplier of grease that ate away the plastic in Jabil-made laptop computers. The deteriorating laptops cost the St. Petersburg company millions of dollars in recalls, sales and court settlements. Reell Precision Manufacturing Corp. of St. Paul, Minn., was ordered to pay Jabil the money plus a 10 percent interest penalty starting from January 1994. Officials at Reell could not be reached for comment, but the company was considered likely to appeal the verdict by a jury in U.S. District Court in Tampa. "I'm obviously very pleased," said Robert Paver, Jabil's general counsel. "This was a heartbreaking episode for our employees who really put their souls into these laptops." Jabil's first contract manufacturing venture was to build laptops for the Epson Corp. At the time, in 1994, its AN700 machines were state-of-the art: light-weight with comparatively quick processors. "It was like the laptops you buy today -- it was that good," said Charles Bavol, managing shareholder for Bavol, Bush and Sisco, the Tampa law firm that represented Jabil in the lawsuit. "Having this happen was really a big nut for Jabil to swallow at the time." The machines were fine when they left Jabil's plants but developed cracks around the hinges, often before being used by consumers. Jabil engineers couldn't determine why. Jabil replaced the plastic in thousands of machines, only to have the cracks recur. The problems hurt Jabil's new publicly traded stock and forced it to stop making the computers. RPM sold the grease to lubricate hinges it made specially for Jabil. But Jabil management accused RPM of knowing the lubricant would weaken the plastic, causing cracking. Another RPM client, KeyTronic Corp. of Spokane, Wash., had the same experience with the grease two years earlier, Bavol said, but RPM never told Jabil. RPM turned the case over to its insurer, St. Paul Insurance Co. Officials at St. Paul's office in Orlando could not be reached for comment Tuesday. The cracked laptops put Jabil and Epson in court. Jabil paid Epson $4.1-million in May 1997 to settle the cracking problems. But Tuesday's verdict requires RPM to reimburse Jabil for the Epson settlement, pay for Jabil's lost profits and foot the bill for Jabil's and Epson's legal costs. Jabil had asked the jury for $15.2-million in total damages, Paver said. With interest, the $8.9-million penalty could reach $13-million. Solving the mystery of the brittle laptops took Jabil 18 months. One day, a Jabil mechanical engineer became curious about the grease at the bottom of a bag of RPM hinges. He placed plastic in the grease and days later saw that it had cracked. Other computer manufactures such as IBM Corp. have had similar problems with lubricants and plastics, Paver said.