A friend of mine is ready to buy JBL, but says he's waiting until it gets down to $12. Doesn't seem likely to me. Any reaction to this?
Why wait until $12?--I'm just curious how some people arrive at certain numbers. I think its pretty unlikely that Jabil will fall that low unless the market continues to slide or the industry takes a big hit. Jabil is a great company. Yes, they have a lot of competition, but I think there is still a lot of room to grow. An article in the WSJ earlier this week or last talked about outsourcing and mentioned Jabil and its competition. Apparently only about 20% of companies that could outsource, are outsourcing. If it truely is more cost-effective to let Jabil, or another OEMs do this work for a company, then the number of companies that outsource should increase. Long term, I think Jabil is a solid investment whether you buy at $12 or $20.
"Apparently only about 20% of companies that could outsource, are outsourcing. If it truely is more cost-effective to let Jabil, or another OEMs do this work for a company, then the number of companies that outsource should increase. Long term, I think Jabil is a solid investment whether you buy at $12 or $20. "But isn't that the point? The companies that could are not outsourcing. It's not just because it's "Cheaper" it's because it frees Capital to be used somewhere else if it will be more profitable than in manufacturing. Like buying & selling stock - hold what you have until there is a better opportunity (over simiplfied).Agilent is doing a pay-cut. That would make sense for the Solectron, Jabils, and whatever as they could employ the "extra" resources (time & people) to solve long-term problems instaed of using a band-aid.Jabil strengths: little to no debt - reacts quickly to downturns - a lower cost provider of services - good selling team.Jabil weakness: people are a disposible resource - basic business structure to ridgid - too short term cost driven
tchamp0 wrote:Jabil weakness: people are a disposible resource - basic business structure to ridgid - too short term cost driven Isn't that one of the main reasons that the market (NASDAQ in particular) has plummeted recently? Companies, and tech companies are especially guilty of this, have been too worried about the short term rather than their long-term prospects. I'm really not blaming the companies. It is really the analysts and subsequently the investors who have done this. Analysts rate companies based on three month stretches, and investors end up doing the same. Hopefully the market shakeup has weeded out enough of that type of investor that it will soon be back to business as usual and companies with strong future prospects, like Jabil, will again be on the upside.
JeffF had an article on MF tonight "passing" on JBL. I've emailed Jeff to express my opinion that his arguements were specious and shortsighted. Given the past performance of JBL, I would not be surprised to see a rather quick rise to the $42 level.
<<<Given the past performance of JBL, I would not be surprised to see a rather quick rise to the $42 level.>>>Market usually prices the stock based on the future performance, not past. Considering JBL's warnings regarding its future performance, the quick rise seems doubtful. Market would expect first to see the proof that things are turning around for JBL.I haven't read the article yet so I don't know the arguments but if you think they are specious and short-sighted, you should post a rebuttal here so that we could all judge the validity of your conclusions.I think it would be helpful both for you and other investors as you may conclude that the article was wrong and increase your position or you may conclude that it was right and either stay put or sell your shares.At the very least, you will be doing research instead of basing your decision on emotions.VladP.S. I have no position in JBL (long or short) but I am very positive on EMS industry in general.
From the SI, regarding JBLs possible inventory issue:http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=15658821http://www.siliconinvestor.com/stocktalk/msg_multireplies.gsp?msgid=15659192H.
The EMS industry & JBL inventory can be a big problem as pointed out in the previous e-mail. My concern comes from ridgidly ahereing to a successful formulae based on using un-skilled people to build and not understanding the complexities of the product to be built require better trained people.The Industrial Revolution is a constant change in the complexity of the product. Ford was almost run over by Cheverolet before Ford adjusted and improved his product. Todays cars are assembled more than just a position on an assembly line placing simple parts. Samething true for the EMS Industry who has to invest more in abiding by the "Standards" and "Quality" and build complex boards. The EMS Industry is still 'thinking' as if they were building simple boards from 10 years ago. 'Tis difficult to stay-up with; but it does require a work force capable of helping the Engineers solve the problems.The orders have slowed down and the inventory is heavy. The new business isn't in the pipeline because when it was 'good' the EMS Industry turned down the smaller dollar amount business and now it would be nice for them to have that business. To fill up the spaces (new factory space) that is not being used - sounds like the kind of problem you would expect an OEM to have.
<<<My concern comes from ridgidly ahereing to a successful formulae based on using un-skilled people to build and not understanding the complexities of the product to be built require better trained people.>>>What EMS companies are trying to do is to base their manufacturing in the lowest cost parts of the world so as to better control their production costs.As far as unskilled labor goes, it is a problem but a well recognized one and almost all of the companies do invest into the training. I read a detailed article about EMS businesses in Mexico where they coordinate their efforts with the local schools to teach the subjects knowledge of which is critical for their work force. They also have training centers at the plants where they continuously upgrade skills of workers.The biggest issue is dealing with tiny margins and increasing their profitability within these margins. That's why such traditional areas as Singapore are becoming too expensive to maintain manufacturing plants in.Vlad
"Market usually prices the stock based on the future performance, not past. Considering JBL's warnings regarding its future performance, the quick rise seems doubtful. Market would expect first to see the proof that things are turning around for JBL."A good track record can be a sign of skilled management or a successful strategy. Many investors find both of those are worth paying for. Past performance can be an important indicator in this regard. This is particularly important when you have a sector-wide slow down. Many investors want to establish positions in the sector when it is perceived to be down, in order to capitalize on any recovery that may come along. Yet, when the sector is slow it can be more difficult to judge who is doing well. That is where track record comes into play.
<<<A good track record can be a sign of skilled management or a successful strategy. Many investors find both of those are worth paying for. Past performance can be an important indicator in this regard. This is particularly important when you have a sector-wide slow down. Many investors want to establish positions in the sector when it is perceived to be down, in order to capitalize on any recovery that may come along. Yet, when the sector is slow it can be more difficult to judge who is doing well. That is where track record comes into play. >>>I agree. My comment was on how the market prices the stocks, not on how investors may make their decisions. If you look at the original post, the poster was anticipating that the stock price will move up very rapidly very soon. Considering how market treats profit warnings and other (hopefully) short term problems (which is highly inefficient which allows investors who do their DD make money), I expressed a doubt that this would be the case.However, considering how investors shrugged off the dismal report from CSCO I may yet prove to be wrong.Vlad
$12 seems quite possible to me. Jabil is currently laying off up to 60% of their engineers and lineworkers at many of their plants, this very day as I speak (This is in addition to the 20-30% they layed off around a month ago). There are no customers knocking down their door. The way I see it, the only customers they have left are Sycamore Networks and Lucent, both of which have greatly scaled back orders. (And Lucent's debt to cash ratio is scary, I don't think their business is very dependable). And in the world of EMS, if you layoff 60% of your talented engineers, you are not going to just jump right back on the manufacturing horse when the business finally does come along. You make money in contract manufacturing by building efficiently. Lines with unskilled engineers will build a board 3 times to get 1 that's right. That is very expensive.And when the business does come back, the first companies to get the business will be the first ones to gobble up the talented engineers. I'm not confident that Jabil will be that company. SCI has a plant in NH for instance, that was constantly fighting with Solectron, Sanmina and Jabil plants in MA to pick up the kind of talent it needed. SCI never got the talent it needed, and to this day that plant is the dog of SCI.Also, I believe the NASDAQ will hit resistance at 2188 and this little faux rally will be over. We will either retest the lows, or break through to 1563. That would make Jabil a good buy between 12.50 and 15.50.Unless we go still lower.I could be wrong.
yummypork, are you the friend that Nilmah referred to at the beginning of this thread? Since you don't have anything in your profile and only a few messages, I wonder if you could tell us a bit about how you come by your information regarding the engineers losing their jobs. I am not doubting you necessarily, just curious for obvious reasons. If you are uncomfortable posting on the board, you could email your response to me.Thank you,Jaipur
My skills lack the ability to copy from two different e-mails and make my comment. Suffice to say If I mis-state the previous comments I'm referring to - it is entirely my fault.1) Article about training workers in Mexico: Very necessary in Mexico and Southeast Asia where labor is very cheap. But, they do not follow what they have been told or taught, the turnover rotates between the different companies, and product being built is volume and has been "Set-Up" in the States. The 'High' margin business e.g. complex, small-pitch, and many sided requires skilled workers who solve problems. 2) 12 -13 dollars a share is like $68 a share - not impossible: But, the lay-offs are cutting in to talent(professional or otherwise) (particularly domestic) and some cut or stop programs that customer want. This has happened 3 times in one program in 5 years. Each time they re-invent the wheel at a more expensive cost than what had been in place. There are more customers than Lucent but the comment about Lucent & others means be cautious. 3) If your business is based on price than that is the 'sword' you will fall on. If you base your business on price as a by product of effiency and quality (Solectron early years)then you will add to your business when it gets tough by taking away from the none quality producer.4) For the next ten years there is more business for EMS market than there are firms. The Economics just lay there: A) Free Capital for the Orignal Equipment manufacturers for other uses B) EMS firms have the flexibility to change a production line in a week; OEMS have product development problems. C) Skills / ideas learned at one line can cross-fertilize the other lines. What kind of a manager / coach / player it takes to 'play' the game of Football when when you could draw on any Quarterback from a half-dozen production lines instead of 'running'each as "I don't know what they do over there". D) The above is all about value, about leading the customers needs, and it's not always price. The customer wants a product hi/her customer can rely on.E) This will be a short loss of growth not a recession. Students of the Economy have argued that a 2% to 3% growth (Barring the World doing something crazy)favors a long-term healthy Economy.F) The stratifcation of the business based on the volume and complexity is very smart way to deversify and Jabil is on the edge of understanding that - if the rest is taken care of.
yummypork Jabil is currently laying off up to 60% of their engineers and lineworkers at many of their plants, this very day as I speakI'm not sure where you get your infomation, but this is not true. I work for Jabil and we are not laying off 60% of our engineers. There have been quite a few layoffs and its been tough. No way have we lost 60% of our engineers, in fact very few engineers have been let go, less than 10%. Most of the layoffs have been production folks and quite a few administrative types too. Hopefully there is light at the end of the tunnel - and its not the train comming at us. There are some real big deals in the making and some new business comming in. I'm confident things will be looking up soon.FlynJim
Its good to hear gossip addressed by employees. thanks.Also, I would take a side bet that JBL won't be as low as $12 by the end of 2nd quarter.Marion, a JBL investor
It is great to hear from people in the know - Thanks! Too often there is a lot of speculation on theses boards that is presented as facts.
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |