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: Bob Wells who wrote (4397)	7/30/1998 5:05:00 PM
From: kolo55	Read Replies (2) \| Respond to of 6317

I think Jim Savage laid a completely plausible analysis. Excellent write-up, along the lines of what we have been talking about for a the last six months, but now with firmer and firmer numbers. The deals that were still rumors 4-6 months ago, are one by one being revealed. I think Jabil has landed HP deal which will add $650M+ to revenues, Bay Networks and Dell each which should be doing $250M of revenues annualized by Aug99, and Lucent which should add $450M per year. Add all of this to base revenues of about $1400M to $1500M due to some growth in existing accounts like Cisco, and you get revenues of over $3000M annualized by the end of FY99. This is $750M per Q. Even assuming a drop in net margins, from 5.6% last Q to say 4.5%, this means $33M in profits per quarter eventually. Using a slightly diluted 38M outstanding shares, one can calculate about 88 cents per share. Now they probably won't hit this number by next August, maybe 18 months out is a better guess. And we don't know the margins on the new business, but this suggests a big upward trend in EPS over the next 12-18 months. The AugQ will be the low for this cycle. So everyone should get on board before the mo guys grab this stock and run it. Paul

To: Bob Wells who wrote (4397)	7/30/1998 5:05:00 PM
From: patroller	Respond to of 6317

Bob here a little something .patroller Jul. 29 (St. Petersburg Times/KRTBN)--TAMPA, Fla.--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. By Eric Torbenson -0