March 20, 2013 / 11:15 PM / 5 years ago

UPDATE 2-Jabil Circuit forecasts third quarter below estimates

* Sees third-quarter core EPS $0.50-$0.58 vs est $0.61

* Sees third-quarter revenue $4.3 bln-$4.5 bln vs est $4.52 bln

* Second-quarter core EPS $0.53 vs est $0.54

* Shares fall 4 pct after the bell (Adds comments from conference call)

By Chandni Doulatramani

March 20 (Reuters) - Contract electronics maker Jabil Circuit Inc forecast third-quarter results that fell short of Wall Street expectations as its largest customer Apple Inc gets ready for product transitions.

Shares of the company, which also reported a second-quarter profit below analysts’ estimates, fell 4 percent after the bell.

“It’s the Apple-centric business that’s under performing right now for them, which is resulting in modestly lower revenues,” RBC Capital Markets Amit Daryanani said.

The iPhone maker is Jabil’s largest customer and contributed about 13 percent to total revenue in 2012.

“Apple’s going through a product transition, and they are due to refresh their product at some point in the June-July time frame,” Daryanani said.

The iPhone maker is widely expected to release its first “budget” phone this year and recent reports have suggested that Apple has contracted with a Jabil unit to provide thin plastic casings for the upcoming phone.

On its earnings call, Jabil said it expects revenue at its diversified manufacturing segment (DMS), which includes design and aftermarket services to its global customers, to fall 10 percent from the second quarter.

Daryanani said the DMS segment is where all the Apple business comes from. The segment accounted for about 44 percent of total revenue in 2012.

Jabil forecast third-quarter core earnings of 50 cents to 58 cents per share, on revenue of $4.3 billion to $4.5 billion.

Analysts on average were expecting earnings of 61 cents per share, on revenue of $4.52 billion, according to Thomson Reuters I/B/E/S.

Jabil also raised its capital expenditure forecast to $700 million from $500 million as it makes investments in China and Taiwan related to research and development and infrastructure.


Net income fell to $88.5 million, or 53 cents per share, in the second quarter ended Feb. 28, from $97.7 million, or 58 cents per share, a year earlier.

Revenue at the company, which also counts Cisco Systems Inc and BlackBerry as customers, rose about 4 percent to $4.41 billion.

Analysts had expected earnings of 54 cents per share on revenue of $4.38 billion.

“As for the quarter, we continue to experience a difficult economy. Although there are signs of modest recovery, our demand patterns suggest a cautious, slow growth environment,” Chief Executive Mark Mondello said on the conference call.

Jabil’s competitors include Flextronics International Ltd and Celestica Inc. Flextronics in January said it lost key customer BlackBerry and will close factories and cut jobs.

Jabil shares, which have fallen about 13 percent in the last six months, were trading down at $18.66 after hours on Wednesday. They closed at $19.48 on the New York Stock Exchange. (Reporting by Chandni Doulatramani in Bangalore; Editing by Supriya Kurane and Anthony Kurian)

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