Jabil Circuit's Revenue Jumps 41%

According to Blanton, Jabil's share of Cisco's cost of goods sold increased from 12.2% in fiscal 2001 to 16.5% in 2003. The dollar value of Jabil's market share declined as the price of electronic goods declined. (Ingalls does not have a banking relationship with Cisco.)

Moreover, Jabil said on a conference call after the earnings announcement that it's forecasting a 15% to 17% quarter-over-quarter increase in networking sales in the current (second) quarter. About 70% of Jabil's networking sales are generated by business with Cisco.

Whitmore also noted that another large customer, Philips Electronics(PHG Quote), recently said it will incur roughly 250 million euros (about $310 million at recent exchange rates) in 2004/2005 as it restructures its consumer electronics division. As a result, Whitmore said, the company may discontinue several products currently manufactured by Philips and "aggressively" squeeze the channel on pricing. Deutsche Bank has no banking relationship with Jabil.

It's possible, though, that Jabil will benefit from the consolidation at Philips as the Dutch-owned electronics giant reduces the number of vendors that outsource for it, said Scot Robertson, who follows the sector for the Stanford Group. Robertson, whose company doesn't have a banking relationship with Jabil, said the company's outsourcing agreement with NEC allows it to use NEC's technologically advanced manufacturing facility in Gotemba, Japan, which should help Jabil take advantage of an "imminent outsourcing tsunami from the island."

Jabil has underperformed much of the EMS sector thus far this year, appreciating 46% while Flextronics(FLEX Quote), the largest player, has gained about 74%; Solectron(SLR Quote) has jumped 61%; and the Nasdaq as a whole has added 44%.

Sanmina-SCI(SANM Quote), however, has blown away everyone, appreciating 161% over the year. Celestica(CLS Quote) has trailed the group, eking out a 1% gain.