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Updated from Dec. 17

After announcing big year-over-year increases in first-quarter earnings and revenue,

Jabil Circuit

(JBL) - Get Jabil Inc. Report

on Thursday is being rewarded with a big bounce in share prices. As of 11:20 a.m. EST, the stock was up $2.18, or 8.1%, to $28.99.

After the close Wednesday, the company reported that revenue in the first quarter of fiscal 2004 rose 41% on the year to $1.51 billion.

The St. Petersburg, Fla., contract manufacturer posted a profit of $42.5 million, or 20 cents a share, compared to $8.4 million, or 4 cents a share, in the year-earlier period, according to generally accepted accounting principles. Core, or pro forma, earnings were 25 cents a share, 2 cents better than what Wall Street was expecting. Analysts polled by Thomson First Call were expecting revenue of $1.4 billion in the November quarter.

Looking to the second quarter, the company expects to earn a core profit of 20 cents to 22 cents a share on sales ranging from $1.35 billion to $1.40 billion. Wall Street was expecting earnings of 21 cents per share on sales of $1.33 billion. The company also raised guidance for fiscal 2004, saying revenue will range from $5.7 billion to $5.9 billion and earnings per share will range from 93 cents to 97 cents. That's 2 cents better than expectations.

Although the electronics market appears to be rebounding from several tough years, Jabil hasn't stood out.

Cisco Systems

(CSCO) - Get Cisco Systems, Inc. Report

, Jabil's largest customer, is rumored to have shifted some of its low-end business from Jabil to Taiwanese contract manufacturer

Hon Hai

. Deutsche Bank analyst Chris Whitmore said the company's revenue from Cisco was off 11% year to year in fiscal 2003, and that the bleeding will continue in 2004.

However, Alex Blanton of Ingalls & Snyder said that while the dollar value of Cisco's business with Jabil has declined, the company has actually gained share of Cisco's business. Jabil itself denies that it is losing market share. In an email exchange with Blanton, a company executive said: "This is one of those rumors that gets out of hand and keeps growing and being repeated."

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.)

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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) - Get Koninklijke Philips NV Report

, 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


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


(FLEX) - Get Flex Ltd. Report

, the largest player, has gained about 74%;


( SLR) has jumped 61%; and the


as a whole has added 44%.


(SANM) - Get Sanmina Corporation Report

, however, has blown away everyone, appreciating 161% over the year.


(CLS) - Get Celestica Inc. Report

has trailed the group, eking out a 1% gain.