After market close Tuesday, the contract electronics manufacturer reported third-quarter earnings in line with analyst estimates and told analysts to lower fourth-quarter expectations. But the company's prediction of fourth-quarter sales between $950 million and $1.05 billion means Jabil expects revenue, at worst, to slide about 5 percent from the third quarter's $1.05 billion.
That's less of a slip than some had expected a day after Jabil rival Solectron said its revenue could fall as much as 25 percent from the previous quarter.
"We could characterize Jabil's outlook as a victory, given what Solectron is expecting," said Tony Boase, analyst with A.G. Edwards.
After the news, shares of Jabil traded at $25.10 in after-hours activity on the Island ECN. Jabil rose $1.54 to $25.11 in Tuesday's regular trading ahead of the report.
Jabil said it now expects fourth-quarter earnings of 13 cents to 15 cents per share. First Call consensus was predicting a fourth-quarter profit of 19 cents per share on revenue of $1.19 billion.
Although Jabil's earnings projection is below First Call's, the fact that fourth-quarter sales will be almost even with the third quarter means the downturn in business is ending, Boase said.
"It sounds like they're treading water in terms of contract wins vs. core customer contract declines," he said. "And that's great."
Business fell mainly in March and April, Jabil executives said, adding that the slowdown eased in May.
"I call this a mucky bottom," said Jabil CEO Timothy Main. "It's difficult to tell exactly where we are in the process. The rate of negative direction has slowed a great deal, and actually in some cases, we're seeing somewhat of a recovery...(but that) does not speak to a profound recovery in the next 90-day period."
Jabil reported fiscal third-quarter earnings of $42.5 million, or 16 cents per share, excluding special charges. Analysts surveyed by First Call produced a consensus forecast of 16 cents per share. Individual estimates ranged from 13 cents to 18 cents per share.
Third-quarter results were within the range of the company's warning in March.
Revenue fell 14 percent sequentially to $1.05 billion, slightly higher than the consensus projection of $1.03 billion. Communications revenue saw the biggest drop, falling 25 percent from the second quarter.
Two Jabil customers, Cisco Systems and Dell Computer, each will generate more than 10 percent of the company's total revenue, said Chris Lewis, Jabil's chief financial officer. The company's reliance on large customers has decreased in recent quarters.