Updated from 4:51 p.m. EDT
A week after
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.
Excluding certain items like stock-based compensation charges, acquisition charges and restructuring, the electronics manufacturing-services company made $78.5 million, or 36 cents a share, up from $68.9 million, or 33 cents a share during the parallel quarter of 2005.
On that basis, the company was in the top range of its
recently revised guidance, but missed the consensus by a penny.
Jabil posted revenue of $2.59 billion, compared with $1.9 billion in the same quarter last year. That was a shade above the average estimate from Thomson First Call at $2.57 billion.
For the fourth quarter now under way, Jabil said it would earn 30 to 35 cents a share before items, missing the average Thomson First Call forecast of 42 cents a share.
Fourth-quarter GAAP EPS should hit 24 to 29 cents, the company said, including 3 cents a share for amortization of intangibles and 3 cents a share for stock-based compensation.
Jabil expects revenue between $2.75 billion and $2.95 billion, above analysts' estimates of $2.69 billion.
For the full fiscal year 2006, Jabil said revenue would range from $10.1 billion to $10.3 billion, higher than the consensus at $9.97 billion. Full-year EPS will be $1.47 to $1.52, short of the consensus estimate of $1.60.
"We are very positive and optimistic about the quality of our business and the direction we're heading," Main said.