Jabil falls after earnings, outlook disappoint

AP News
Posted: Sep 26, 2012 2:11 PM
Jabil falls after earnings, outlook disappoint

NEW YORK (AP) — Shares of Jabil Circuit Inc. took a hit Wednesday after the electronic parts maker posted a 28 percent drop in its fiscal fourth-quarter earnings, citing slowing demand and higher expenses. Its earnings outlook for the current quarter was also below Wall Street's expectations.

THE SPARK: Jabil said that demand was slow for most of its businesses and reported higher costs associated with the start of a new program in its specialized services unit. In its report late Tuesday, the St. Petersburg, Fla.-based company posted adjusted earnings of 54 cents per share. That was 4 cents shy of Wall Street's expectations, though revenue was slightly higher.

For the current quarter, Jabil forecast adjusted earnings of 51 cents to 62 cents per share on $4.3 billion to $4.5 billion in revenue. Analysts were expecting income of 67 cents per share and $4.53 billion in revenue, according to FactSet.

Jabil CEO Timothy Main said in a statement that while the economic climate "remains challenging," the company's long-term goals and competitive position are intact.

THE ANALYSIS: Citi Investment Research analyst Jim Suva called the quarter "mixed" and kept a "Neutral" rating on Jabil's stock. He said while he has "no issues with Jabil's strategy" but rather has a cautious view on the entire electronics manufacturing services, or EMS, sector, which has been hurting in the lackluster global economy.

"In fact, Jabil is well positioned with Apple (one of the few growing companies) and Jabil's exposure to Apple is above Jabil's corporate average profitability," he wrote in a note to investors. "However, we simply need a stronger macro economy in order for the EMS stocks to work and beat expectations."

SHARE ACTION: Jabil's stock fell $1.99, or 9.5 percent, to $18.99 in afternoon trading. The stock has traded between $15.65 and $27.40 in the past 52 weeks.