Jabil cuts outlook as coronavirus curbs manufacturing for tech giants, 5G ecosystem

Jabil counts Amazon, Apple, Cisco and HP as big customers. Its plants in China are operating at 65% to 70%.
Written by Larry Dignan, Contributor

Contract equipment manufacturer Jabil cut its outlook for the current quarter due to employees unable to return to work due to the coronavirus travel restrictions. The upshot is that Jabil's factories are operating at 65% to 75% capacity.

Although Jabil isn't a household name the company manufacturers products for a bevy of big brands including Apple, Cisco, GoPro, NetApp, Amazon, HP and Nokia to name a few.

Jabil's profit warning highlights the ongoing supply chain pain from the coronavirus, which is now spreading in more countries outside of Asia. Jabil didn't provide exact targets but noted that its guidance given on December 17 is no longer valid.

Wall Street was expecting Jabil to report revenue of $6.33 billion for its fiscal second quarter with non-GAAP earnings of 71 cents a share.

In a statement, Jabil CEO Mark Mondello said:

Our first priority is the overall safety of our people. To this end, we've instituted broad testing and quarantine protocols to support those who are on-site at our factories. In addition, we remain in close contact with our employees who've been unable to return to work due to on-going travel restrictions.

After a stronger than anticipated start to the fiscal quarter, we're now in a position to 'read and react' to this very dynamic labor and supply chain situation. The actions taken by our teams have been admirable, to say the least. As we sit today, our factories, which have been adversely impacted by the virus, are now running at roughly 65-70 percent capacity, while overall product demand remains largely as we anticipated at the beginning of the quarter.

Mondello added that Jabil would have further comment on its second quarter earnings conference call in mid-March. For now, Jabil is working to clear product backlog while focusing on its employees' well-being. Here's a look at Jabil's core markets, which have a lot to do with 5G and the networking gear and devices to support it. 


At the Goldman Sachs Technology and Internet conference Feb. 12, Courtney Ryan, chief of staff at Jabil, said the company was controlling everything it could and bringing factories up to speed. She added that "the thing we're a little bit more concerned about is what cascading effects it will have on the supply chain."

Jabil's manufacturing footprint is diversified, but China remains a big hub for the company. Jabil has locations in China, Hungary, Malaysia, Mexico, Singapore and the United States, according to regulatory filings

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