Jabil 2Q revs up, profit posted

Electronic News, March 25, 1996

St. Petersburg, Fla.--Jabil Circuit Inc. reported 2Q96 revenues grew to $235.6 million from $114.4 million in 2Q95. Net income for the quarter ended Feb. 29, 1996 was $6.3 million, or 34 cents per share, versus a net loss of $767,000, or 5 cents per share, in last year's quarter.

Gross margin grew to $18.3 million, or 7.8 percent of revenue, from $5.8 million, or 5.1 percent. Operating income grew to $11.7 million, or 5.0 percent of revenue, from $659,000, or 0.6 percent.

President Thomas A. Sansone noted, however, that "the loss of the Quantum business in Malaysia has provided significant challenges to overcome in the next several quarters. The opportunity before us is to reground the business foundation and emerge with significantly improved diversification; higher margins; and a well-implemented global production capability."

In late January, Jabil received a cancellation from Quantum, which had closed its high-end hard disk drive manufacturing facilities in Milpitas, Calif., and its Malaysian operation. "Those were the products we built for them," said a Jabil spokesperson."We quantified it as $60 million a quarter for us; on the other hand, we are continuing production for Quantum's tape drive assemblies and they will continue to be about 10 percent of revenue going forward. We'd been manufacturing high-end hard disk drive assemblies for them for about a decade," the spokesperson said.

Results from Jabil's Malaysian factory were profitable in 2Q96. Quantum extended its production requirements for the high-end drives until the end of May, and arrangements are being finalized for "a multinational computer customer." "We have had a significant challenge to find new production for the Malaysian factory on such short notice, but have made a good start," said Mr. Sansone. "If we can close some of the other product opportunities we are currently discussing, this factory could be back on track. Our efforts are focused on positioning this factory to continue the contribution it made during the second quarter."

Jabil, an electronics manufacturer of circuit board assemblies, announced new production plans for several current and new customer relationships, including Cascade Communications, CellNet Data Systems, Cisco Systems, PairGain Technologies and 3Com.

"We have made important progress in recovering from the loss of the Quantum business and declines from some of our PC customers, but the business will require our full efforts over the next several quarters," Mr. Sansone said.

Referring to the outlook, the executive said business "appears to be firming up and may return to current levels after production of new products begins in summer. Key variables until fall will be our success in starting new products and bringing international factories to full production."