Jabil Circuit Inc., a maker of electronics for Apple Inc. and Cisco Systems Inc., fell the most in six years after earnings missed estimates and the company announced plans to sell its warranty-repair business.
Jabil shares tumbled 21 percent to $15.67 at the close in New York, the biggest decline since December 2007. The stock had been up 2.2 percent this year through yesterday.
The St. Petersburg, Florida-based company posted quarterly earnings yesterday of 51 cents a share, excluding some items. Analysts had estimated 54 cents on average, according to data compiled by Bloomberg. Sales fell 0.6 percent last quarter to $4.6 billion. Jabil also predicted sales declines for two of its three major business units in the current quarter.
The sluggishness suggests that Jabil may be suffering from a slowdown in production of Apple’s iPhone, according to Glen Yeung, a Citigroup Inc. analyst. Jabil also plans to sell its aftermarket services business to IQor Holdings Inc. for $725 million, according to a separate statement yesterday. That unit generated $1.1 billion in sales in the last fiscal year.
“This divestiture should provide us the financial flexibility to potentially add more engineering intensive capabilities, which should allow us to expand and diversify our core manufacturing business,” Mark Mondello, chief executive officer for Jabil, said in the statement.
For the current quarter, the company expects revenue in both its manufacturing and rapid-production services units to fall 25 percent each from the same period last year, while enterprise and infrastructure sales will remain stable. The divested warranty business will be considered a discontinued operation.
Jabil expects the warranty-service deal to close by next May. The company’s board also approved a share buyback of as much as $200 million.