UPDATE 1-Jabil to sell warranty repair business; forecasts weak quarter
Dec 17 (Reuters) - Contract electronics maker Jabil Circuit Inc said it would sell its warranty repair business in a deal valued at $725 million, as it focuses on its manufacturing operations.
The company, whose customers include Apple Inc and Cisco Systems Inc, also forecast current-quarter results way below Wall Street estimates.
Jabil's shares fell 14 percent in extended trading.
The company will sell the warranty repair business, also known as aftermarket services, to U.S.-based business process services company iQor Holdings Inc.
The business accounted for about 6 percent of Jabil's total revenue of $18.3 billion last year.
Jabil said JP Morgan was the financial adviser and Holland & Knight LLP its legal counsel for the deal, which is expected to close in the third quarter.
Jabil forecast second-quarter core earnings of 5-15 cents per share on revenue of $3.5-$3.7 billion.
Analysts were expecting earnings of 52 cents per share on revenue of $4.28 billion, according to Thomson Reuters I/B/E/S.
The company expects revenue to fall 25 percent in its diversified manufacturing services and high velocity businesses.
The two businesses accounted for 70 percent of Jabil's total revenue last year. The high velocity business designs and markets products for devices and gadgets such as mobiles, set-top boxes and printers.
The company attributed the expected second-quarter revenue decline in the high velocity business to the winding down of its business with BlackBerry . Jabil said in September it could part ways with BlackBerry, its second-largest customer last year.
Jabil's shares were down at $17.02 after the bell. They closed at $19.72 on the New York Stock Exchange on Tuesday.
The company said net income attributable to the company rose to $117.9 million, or 57 cents per share, in the first quarter, from $105.8 million, or 51 cents per share, a year earlier.
Revenue fell marginally to $4.61 billion.
Analysts had expected earnings of 54 cents per share on revenue of $4.46 billion.