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Jabil: Cuts strengthen company

As the electronics company reports lower yearly earnings, it says its job reductions prepare it for growth.

By KRIS HUNDLEY, Times Staff Writer
© St. Petersburg Times
published September 20, 2002


ST. PETERSBURG -- After a year spent cutting jobs, closing high-cost locations and diversifying its customer base, executives at Jabil Circuit Inc. of St. Petersburg said the company is better positioned for the future.

"Jabil's risk profile has been reduced," said Tim Main, the company's president and chief executive. "Our opportunities for growth have expanded, and we'll be able to approach the market from a position of strength."

In a release after the close of the market Thursday, the electronics component manufacturer reported that revenues for its fiscal year ended Aug. 31 declined 18 percent to $3.5-billion, compared with $4.3-billion a year ago.

Net income was $34.7-million or 17 cents a share compared with $118.5-million and 59 cents a share a year ago.

For the quarter, the company's revenues were $988-million, up 5 percent from the same period a year ago. It is also the second consecutive quarter of sequential revenue growth, signaling stabilization, the company said.

Earnings for the quarter were $1.8-million or 1 cent a share compared with $11.2-million or 6 cents a year ago. During the fourth quarter, Jabil took a restructuring charge of $27.6-million in connection with the consolidation of operations acquired from Marconi Communications.

Since the beginning of September, Jabil has said it plans to close plants in Texas and Idaho, resulting in the elimination of up to 650 jobs. The company said it expects to take restructuring charges of up to $80-million in fiscal 2003 for reducing its capacity at high-cost production facilities around the world. Beth Walters, Jabil's vice president of investor relations, declined to say whether additional plants will be closed, saying the company has not yet finalized its plans for the coming year.

In the coming year, about 20 percent of Jabil's production will be in the United States, 22 percent in Asia, 23 percent in Mexico and Latin America and 35 percent in Europe, with an increase in concentration in primarily lower-cost, central European locations, Main said.

In 2003, Jabil's three biggest customers will be Cisco Systems Inc., Hewlett-Packard Co. and Royal Philips Electronics NV.

Though the telecom business continues to suffer, Main said Jabil will post $1.04-billion in sales in the first quarter of fiscal 2003 due to growth in consumer electronics, automotive, computing and storage, and medical and instrumentation.

Jabil's shares closed Thursday at $16.67, down 16 cents.

-- Kris Hundley can be reached at hundley@sptimes.com or (727) 892-2996.

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