NEW YORK ( TheStreet) -- The last time I talked about Jabil Circuit (JBL - Get Report) I said the company was going to remain in a "holding pattern" for the foreseeable future. I didn't believe it was going to take this long.
The company is in the midst of a very important transition that has been going on for almost a year. Although Jabil is one of the best brands in the electronics manufacturing service (EMS) business, the company has bigger ambitions including building its capabilities in diversified manufacturing, an area where (among others) Apple (AAPL) is a very important customer.
Unfortunately, entering the diversified manufacturing space has come at a pretty significant cost to shareholders. After trading as high as $27.40 a year ago, the stock has fallen to $16.39 two months ago -- losing as much as 40%. I don't believe this trading pattern will remain this way indefinitely. Investors, however, remain unsure.
I don't doubt Jabil is making the right transition and taking the necessary steps to ensure its long-term viability, but I do question the aggressiveness and the toll it has taken on Jabil's core business. With third-quarter earnings due out on Wednesday, management will have a chance to change the stock's near-term trajectory.