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Jabil Circuit Sees Stock Sink 22 percent
(Tampa Tribune (FL) (KRT) Via Thomson Dialog NewsEdge) Jun. 14--TAMPA -- Jabil Circuit shares plunged 22 percent Tuesday after the St. Petersburg-based electronics maker surprised investors by warning that profits could be as much as a third lower than previous expectations.
The company, which blamed rising labor costs and production delays at some American plants, saw its stock drop $7.11 per share to $25.31 Tuesday on the New York Stock Exchange.
Shares had fallen as much as 27 percent earlier in the day, the biggest drop in a decade.
Nearly 30 million shares traded hands, more than 13 times the daily average. The decline, the biggest one-day loss at closing since 2000, wiped out $1.5 billion in market value, according to data from Bloomberg News.
Without divulging many details, Jabil Chief Executive Officer Timothy Main said on a conference call with analysts and investors Tuesday, "There were a lot of issues at the same time. ... We are disappointed that we didn't see them early enough."
Jabil employs about 50,000 people worldwide, including about 2,000 in the Tampa Bay area. The company has been a darling of Wall Street investors for several years as it expanded abroad, manufacturing electronics for companies such as Nokia Corp. and Royal Philips Electronics. Jabil posted sales of $7.5 billion in fiscal year 2005.
In March, Jabil announced profits for its fiscal second quarter that ended May 31 would rise to 39 cents a share, boosted by strong demand for cell phones and medical equipment. Late Monday night, however, the company warned instead that net income would be 26 cents to 30 cents per share. The company is scheduled to report its second-quarter results next week.
Monday's bad news follows a report last month that the Securities and Exchange Commission was probing the company's executive pay practices. The SEC is trying to determine whether the company manipulated the terms of stock options to artificially boost their value, a claim the company denies.
"Everyone was really totally taken aback by the news," Richard Stice, an analyst with Standard & Poor's in New York, said of Monday's profit warning. "The concern here is that the company has always executed so flawlessly, and you wonder, is this a blip on the screen or is there something more systemic, something more serious."
Stice said he is keeping his "buy" recommendation on Jabil stock, primarily because he thinks the sell-off Tuesday was an overreaction. "But I do want to know how long these issues are going to last."
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