Shares of Jabil Circuit ( JBL - Get Report) rose11% Wednesday after the contract manufacturer beat earnings estimates and offered a positive outlook. Nevertheless, some analysts were skeptical of the rally. Jabil reported net income on Tuesday for its second quarter of $15.3 million, or 8 cents a share, above estimates it would earn 7 cents a share, according to Thomson Financial/First Call. Jabil said base-operating margins would improve by a full percentage point this quarter -- a fairly large increase in the mass-production contract manufacturing field. The nagging problem for electronic manufacturing services providers is their inability to predict whether or when IT spending will rebound. In a survey of chief information officers, Goldman Sachs reported last week that a majority of them do not think normal spending is going to return until 2003 or beyond. Some analysts said Jabil's stock got ahead of itself Wednesday. "This is an overreaction to what they said last night," said Tony Boase, an analyst at A.G. Edwards.
"I think it is positive that they're talking about an up quarter, in terms of revenue, for the first time in four quarters," said Todd Coupland, an analyst at CIBC World Markets. "Given the company's operating leverage, a little bit of revenue improvement can add a lot to the bottom line."