Jabil Circuit Takes Out the Ax

Updated from 4:51 p.m. EDT

A week after Jabil Circuit (JBL Quote) warned it would miss its quarterly earnings targets, CEO Timothy Main said it would cut jobs and close high-cost plants to boost earnings and get the "Jabil train back on the rails."

"We will need fewer high-cost locations to achieve our objectives," Main said, declining to give specifics on which plants would be targeted or how many positions would be eliminated.

Late Wednesday, Jabil reported that its third-quarter profit rose, but the company missed the Street's earnings-per-share target and guided earnings lower for the current quarter.

At the same time, the company said it had received a subpoena from the U.S. Attorney's office for the Southern District of New York for material related to stock options. It is already the subject of a stock-options probe by the Securities and Exchange Commission.

Shares of Jabil were off 5.1% in recent after-hours trading to $24.19 on Instinet.

On June 13, Jabil warned it was hit with $20 million in unexpected charges for the quarter related to the ramp of its tooling operations, execution problems at one of its U.S. plants and higher costs in its repair program.

"We were surprised by it. I have to admit, we should have known about it earlier," Main said on a conference call after the bell. "We are taking this as a bit of a wake-up call to get back to basics."

Main said that while the company faces another difficult quarter ahead as the tangle of issues are addressed, Jabil expects to be back on its feet in fiscal 2007.

"We're not dealing with a business that's shrinking," Main said.

Jabil said late Wednesday that for the third quarter, it earned $64.2 million, or 30 cents a share, up from $59.4 million, or 29 cents a share, a year ago.