Jabil Circuits (JBL)

[OldAIMGuy]

Hi T, Re: JBL vs the markets...........

Both SANM and JBL look bad over the last year (253 days on this graph - just slide the x-axis) but JBL's had a tougher time it seems.
http://stockcharts.com/charts/performance/perf.html?SANM,jbl,qqqq,spy

The whole of the ECM group has been stinky because of inventory concerns from their customers. This is a good cyclical stock one can trade, but with the general market weakness over the last 7 days it's accentuated the downside with JBL.

Here's what Value Line has to say about it:
Jabil Circuit announced that it would record a $54.3 million charge for erroneous stock-option-grant dating, stemming from a review of the company's stock-option granting practices. This was a direct result of an informal inquiry from the SEC, as well as several lawsuits. The aggregate incremental noncash stock-related charges are for fiscal 1996 through fiscal 2005 (year ends August 31st), in which about $48.9 million relates to options granted to employees who were not company executives or board directors. The total charge comprises less than 1% of Jabil's profits during the ten-year time period. In addition to the previously announced need to restate fiscal 2005 financial statements, fiscal 2003 financial statements were also found to be unreliable. The company still has yet to file its annual reports (form 10-K) for fiscal 2005 and 2006, as well as subsequent quarterly (10-Q) reports.

The company completed a tender offer for Taiwan Green Point Enterprises, an electro-mechanical manufacturer and service provider for the mobile product and consumer market. Approximately 261 million shares of stock were acquired, representing over 97% of Taiwan Green Point's outstanding shares, for about $871 million. The merger, pending government approvals from the Taiwan Stock Exchange and the Financial Supervisory Committee, should be completed in the first half of 2007, at which time the remaining stockholders would receive a cash payment for the outstanding shares.

Jabil's restructuring plan is on schedule to take place during the next two years. The cost of realignment of manufacturing capacity from expensive locations will likely be in the high range of the company's estimate of $220 million to $250 million, a nonrecurring charge that we will exclude from our earnings presentation.

Despite the recent price drop, this stock has good long-term recovery potential. However, reflecting the recent weakness, following the announcement of the options charge, these shares are ranked to lag behind the market in the next six to 12 months. Investors should also note the low Stock Price Stability score.

John D. Burke April 13, 2007

They rank JBL a Timeliness of 4 (not very good) and a Stock Price Stability rank of 30 (out of 100, again indicating more volatility than the average stock).

Best regards, Tom