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Jabil's profits tumble hard

The reports let company shed its "late filing" tag.

By HELEN HUNTLEY Personal Finance Editor
Published May 25, 2007


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It turns out stock options weren't the only problem at Jabil Circuit. The global electronics manufacturer's profits nosedived during the three quarters when it was not reporting results to the public while reviewing its options accounting.

The St. Petersburg company said Thursday that it lost money during the quarter ended last August - the first operating loss in its history and the first net loss since 1994. For the first six months of 2007, profits were nearly two-thirds less than the previous year. The company said the current quarter might produce a loss as well.

"I am relieved to have this period behind us and I will be the first to acknowledge that our financial performance of the last three quarters has been uncharacteristic for Jabil and below our long-term objectives," president and CEO Tim Main told analysts in a conference call.

The good news is that Jabil got back on schedule with its financial filings, and the New York Stock Exchange even removed the "LF" (for late filing) from Jabil's stock listing. However, other issues now move into the spotlight.

Main said the company is changing the product mix in its consumer division, which will mean lower revenues in the short term but should position the company for long-term growth. Jabil took a $12-million blow to earnings from the failure of an unidentified consumer product it had developed with one of its customers.

Continuing problems at an electromechanical tooling operation in Austria also had a big impact on earnings. However, that operation is being shuttered, and the work will be moved elsewhere.

Other earnings issues included higher interest expenses associated with the recent acquisition of Taiwan Green Point Enterprises and $11.2-million in legal and accounting costs (so far) related to the options review.

Jabil is one of more than 200 companies under scrutiny for the way it handled options, although Jabil previously announced that an internal investigation found no evidence of impropriety.

The stock market's reaction to Jabil's earnings news Thursday was muted: The stock fell 47 cents to close at $22.99.

"Things are a little bit off, but there were no massive negative surprises," said Amit Daryanani, an analyst with RBC Capital Markets in San Francisco. "The bigger question is what do we do going forward. That's what will drive stock performance."

He said his biggest concern was Main's unwillingness to discuss the outlook for the quarter that begins next month.

"We still have a growing business that's fundamentally in good shape in terms of our operational day-to-day execution of the business, customer relations, growth and the rest of it," Main said. "We're going to have to take it quarter by quarter to rebuild our margin profile, rebuild our profitability and rebuild investor confidence in our ability to do that."

"I am relieved to have this period behind us and I will be the first to acknowledge that our financial performance of the last three quarters has been uncharacteristic for Jabil and below our long-term objectives."

Earnings statements 

4th Qtr     Yr Ago
(8/31/06)     (8/31/05)

Revenue $3B     $2B
Net Income -$45.6M     $58.4M
Per Share -22 cents     28 cents

1st Qtr     Yr Ago
(11/30/07)     (11/30/06)

Revenue $3.2B     $2.4B
Net Income $41.4M     $76.9M
Per Share 20 cents     37 cents

2nd Qtr     Yr Ago
(02/28/07)     (2/28/06)

Revenue $2.9B     $2.3B
Net Income $13.9M     $69M
Per Share 7 cents     32 cents

3rd Qtr Projection
(05/31/07)

Revenue $2.9B to $3B
Per Share -8 cents to 4 cents

[Last modified May 24, 2007, 23:23:58]


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