Jabil Circuit retains key customer, shares rise
(Reuters) - Jabil Circuit Inc (JBL.N) forecast fourth-quarter results below analysts' estimates as sales stagnate, but the contract electronics maker's shares rose on expectations that it retained a key mobile phone customer.
One of Jabil's top mobile phone customers, Research In Motion Ltd RIM.TO RIMM.O, has been looking to cut costs by shrinking its global supply base. On Monday, the struggling BlackBerry maker dropped Canadian contract manufacturer Celestica as one of its suppliers.
Jabil on Tuesday said it was selected as a "go-forward partner" for a mobile phone customer. The company did not name the customer but management commentary during a post-earnings conference call indicated it could be the BlackBerry maker.
"After yesterday's announcement by Celestica that they were disengaging with RIM, the odds certainly moved higher that Jabil could potentially win some incremental RIM business," Longbow Research analyst Shawn Harrison told Reuters.
On the call, Chief Executive Timothy Main said revenue from the customer would remain less than 10 percent in the fourth-quarter through full year 2013 and that it would consolidate production for its partner in Mexico and Hungary over the next two quarters.
The other main suppliers of RIM, which is looking to cut $1 billion from its operating costs this year, are Flextronics International Ltd (FLEX.O) and Quanta Computer Inc (2382.TW), which makes RIM's poor-selling PlayBook tablet.
Jabil, which has been seeing slowing sales in the last few quarters, expects fourth-quarter core earnings of 54 cents to 66 cents per share on revenue of $4.1 billion to $4.35 billion.
Analysts expected a profit of 68 cents per share, excluding items, on revenue of $4.37 billion, according to Thomson Reuters I/B/E/S.
Net income for the third quarter fell to $101.3 million, or 48 cents per share, from $104.7 million, or 47 cents per share, a year earlier.
Jabil, which also supplies to Cisco Systems Inc (CSCO.O), Hewlett-Packard Co (HPQ.N), IBM Corp (IBM.N) and Nokia (NOK1V.HE), reported core earnings of 64 cents per share.
Revenue at the company, which competes with Flextronics, Celestica Inc and Sanmina-SCI Corp (SANM.O), fell 2 percent to $4.3 billion.
Analysts expected a profit of 64 cents per share, excluding items, on revenue of $4.29 billion.
Shares of the company rose 2 percent to $19.80 in after-market trade on Tuesday. They closed at $19.42 on Tuesday on the Nasdaq.
(Reporting by Chandni Doulatramani in Bangalore; Editing by Saumyadeb Chakrabarty)
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