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Letter to the editor

Jabil will cut 219 workers

In St. Petersburg, 79 jobs will be lost as part of the electronics maker's restructuring.

By Madhusmita Bora, Times Staff Writer
Published June 22, 2007

Electronics manufacturer Jabil Circuit reported nose-diving profits Thursday and said it's laying off 79 employees in St. Petersburg.

"A year ago, we entered what was an extremely challenging period," Tim Main, president and CEO, said in a conference call with analysts. "We are not where we wanted to be a year ago, but we are not in such a bad place either."

Wall Street rallied behind the St. Petersburg-based company boosting shares by $1.70, or 8.2 percent, to $22.90 in after-hours trading. What fueled enthusiasm was the company's adjusted third-quarter profit and sales, which beat analyst estimates. Overall, profits were down 90 percent because of restructuring and amortization costs.

For the quarter ended May 31, net income fell to $6.2-million, or 3 cents per share, from $64.2-million, or 30 cents per share, a year ago.

In its conference call, the company did not address this week's layoffs. Ken Darby, director of global marketing communications, said 219 of the 75, 000 employees worldwide are losing their jobs as part of an ongoing restructuring.

Main said he remains optimistic about the company's performance and called the recent $3.6-billion acquisition of Solectron by rival electronics Flextronics a positive sign for the industry. He countered analysts' concerns about the widening gap in stature between Jabil and two formidable competitors, Flextronics and Foxconn.

"I grew up in Detroit where General Motors had a huge gap on Toyota," he said. A quality company doesn't focus on "gaps" but on customers, quality and good solutions, the way Toyota did, he said.

"We believe customers believe we have sufficient scale," Main said. "We don't believe the gap is a problem."

Explaining its sharp drop in earnings, Jabil said it took a $19.4-million charge in restructuring costs, $7.5-million in amortization costs and $14.3-million in stock-based compensation costs. Excluding those expenses, it would have netted 23 cents per share, the company said. Analysts were expecting earnings of 21 cents per share.

Jabil was among a list of companies under regulatory investigation for how it granted stock options to executives. Though an internal investigation found that top executives did not issue themselves backdated stock options or try to get others to issue them, Jabil still awaits what it expects will be a positive resolution to the regulatory review.

Main said the inquiry and review process in the aftermath of the allegations was expensive, lengthy and "ultimately distracting."

"Thankfully throughout our people showed a heartening degree of character and perseverance," he said.

Madhusmita Bora can be reached at mbora@sptimes.com or (813) 225-3112.

[Last modified June 21, 2007, 23:29:21]