Jabil shares fall after weak 1Q guidance

Jabil Circuit shares fall after weaker-than-expected 1st-quarter guidance; BlackBerry worries

Associated Press

NEW YORK (AP) -- Shares of Jabil Circuit Inc. tumbled Thursday after the provider of electronics manufacturer gave a weaker-than-expected outlook for the current quarter, hurt by its BlackBerry business.

THE SPARK: Jabil said on Wednesday that it expects adjusted earnings of 50 cents to 60 cents per share, below the 63 cents that analysts polled by FactSet had expected. And it forecast revenue of $4.35 billion to $4.65 billion for its fiscal first quarter, below analysts' estimates of $4.87 billion.

The company also said that it expects to report $99 million in restructuring costs over the next two years as well as $35 million to $85 million in charges related to BlackBerry Ltd.

BACKGROUND: BlackBerry was Jabil's second-largest customer. But BlackBerry's share of the smartphone market has plunged in recent years. It is slashing jobs and selling itself to its largest shareholder for $4.7 billion after big losses.

Jabil expects to take between $35 million to $85 million in charges related to discussions with BlackBerry Ltd. during the current year.

ANALYST COMMENT: Stifel Nicolaus analyst Matthew Sheerin said the guidance weakness from Jabil was due "almost solely" to a significant decline in the company's BlackBerry business, which amounted to 12 percent of sales in the fiscal year through Aug. 31.

The wind-down of the BlackBerry business will lead to more charges and hurt Jabil's profitability in the short term, he said. But he thinks cost cuts, a pickup in growth elsewhere and the acquisition of Nypro, a provider of manufactured precision plastic products for the health care, packaging and consumer electronics industries, should help the company bounce back.

STOCK MOVEMENT: Shares of St. Petersburg, Fla.-based Jabil fell $2.31, or 9.6 percent, to $21.69 in afternoon trading. The stock has traded in the 52-week range of $16.39 to $24.32.

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