Jabil tops list of bay area's best

For the third time in four years, the St. Petersburg maker of circuit board assemblies is the best-performing local, public company. Time Warner is the top employer with headquarters elsewhere.

By HELEN HUNTLEY

© St. Petersburg Times, published June 4, 2000

The technology revolutionizing the way we communicate, conduct business and entertain ourselves is reshaping the Times 50. Companies able to capitalize on those changes are boosting profits and shareholder returns, winning spots at the top of our annual list of top performers.

This year Jabil Circuit Inc. reclaims its position as the best-performing public company based in the Tampa Bay area, an honor it earned in 1997 and 1998 before dropping to fifth place in 1999. Time Warner Inc. takes first place in the inaugural edition of our list of top Tampa Bay employers with headquarters elsewhere.

Jabil, based in St. Petersburg, makes circuit board assemblies used in communication, computer and automotive equipment. More than half its revenues come from four industry leaders: Hewlett-Packard Co., Cisco Systems Inc., Dell Computer Corp. and Lucent Technologies Inc. As its customers have grown, so has Jabil. In fact, Jabil is growing faster than many of the companies it serves.

In recent years Jabil has put together a track record of consistent performance no other bay area public company can match. Between 1995 and 1999, Jabil's revenues climbed 258 percent while profits rose 1,156 percent.

[Times photo: Dirk Shadd] Jabil Circuit Inc.'s assembly line room in St. Petersburg bustles with activity.

Investors noticed. The stock price is up more than 5,000 percent for the five-year period ended April 28. Jabil has a market value larger than any other public company based in the Tampa Bay area, with stock worth more than $7-billion. It employs about 3,000 people in St. Petersburg and 15,000 others around the globe.

Our other list-leading company doesn't make electronic equipment; it uses it. Time Warner Inc. is a New York-based media and entertainment empire that includes CNN News, TBS Entertainment, Home Box Office, Time Inc.'s magazines and books and Warner Bros. records, film and television production.

Locally, the company is best known as the parent of Time Warner Cable, which has about 900,000 bay area subscribers and its own 24-hour news channel, Bay News 9. Time Inc. operates a magazine customer service center in Tampa, and Time Warner Telecom provides local and long-distance telephone service and Internet access across Central Florida. Together, the company's divisions employ about 3,180 people in the bay area.

Like Jabil, Time Warner has grown dramatically: Revenues are up 239 percent since 1995. Unlike Jabil, the company was losing money until last year. But in 1999, Time Warner made $1.9-billion, nearly as much as Jabil's total revenues. It was that dramatic improvement in profitability, along with the strong return to shareholders, that put Time Warner at the top of the out-of-town list.

The company's investors have been rewarded with a 130 percent return over two years and 408 percent over the five years ended April 28. Big gains came this year when America Online said it would buy Time Warner in the largest corporate merger ever. Although the stock is down from its March peak of $104.94, the price still is twice what it was two years ago. The proposed deal is under regulators' review.

The $108-billion market value of Time Warner's stock ranks third on our list of out-of-town companies, but it is three times larger than the market value of all 30 of the companies based in the bay area combined.

The runners-up on the Times 50 list also are companies riding the wave of technological change. On the local list, Digital Lightwave Inc. soared from 49th place last year to second place this year. That leap is partly the result of a jump in the company's stock price: from $2.31 to $64 a share in 1999. The company grabbed Wall Street's attention because it is in a hot industry, making fiber-optics testing equipment, which benefits from growth of the Internet. Digital Lightwave also engineered an impressive reversal of fortunes, going from a $30-million loss to a $5-million profit.

The out-of-town runners-up on our list are Citigroup Inc., with its vast global financial services empire, and telephone services provider GTE Corp., which is being acquired by Bell Atlantic Corp.

Since the Times began using performance measures in 1997, rankings for many Times 50 companies have varied dramatically from one year to the next. Former high-fliers reversed gears and fell off the list entirely, among them IMRglobal Inc., the Clearwater software company, which was second on the 1998 list, 11th in 1999 and unranked this year.

Some companies ranked near the bottom of previous lists were eliminated this year because the category of locally based companies was limited to 30 entries to reflect the declining pool of major corporations with headquarters here.

Still other companies dropped off the list of local companies because they no longer met the Times 50 criteria. Companies such as Kaydon Corp. moved their headquarters elsewhere. Maxxim Medical Inc. went private. Buyouts took other companies off our list. ABR Information Services Inc., No. 22 on last year's list, now is part of Ceridian Corp., which debuts as No. 13 on the out-of-town list. On the way out is Florida Progress Corp., pending completion of its acquisition by Carolina Power & Light.

Jabil's expanding opportunities

The constantly changing landscape makes Jabil's performance all the more impressive. Not only was it No. 1 in three out of the four years, it was the only company to make the top 10 each year during that period.

What does the future hold for Jabil?

"It's pretty easy for me to envision the next five years as being wonderful times for the company," said William Morean, Jabil's chairman and chief executive. "We're blessed with having this huge market opportunity."

Absent a downturn in the economy, Jabil's biggest challenge may be figuring out which opportunities to pursue.

Many big companies selling computer and communications equipment have found it less expensive to contract with companies such as Jabil than to make the equipment themselves. As they get out of manufacturing, they are putting their own factories and equipment up for sale. But buying them only makes sense for Jabil if the price is right and the business can be run profitably.

"We've been very selective," Morean said. "We have to artfully walk away from the ones that don't make sense."

Jabil is looking at more deals, particularly in the telecommunications market, where activity is heating up. The company recently filed preliminary paperwork to issue $750-million in securities. The "shelf offering," filed with the Securities and Exchange Commission, is designed to make it possible for Jabil to issue new stock or debt quickly if the right opportunity comes along.

So far Jabil has been a pretty smart shopper. It is now seeing a payoff from laser printer manufacturing operations in Boise, Idaho, and Bergamo, Italy, acquired in 1998 from Hewlett-Packard.

"That's producing more opportunities with HP," Morean said. "We are now in discussions regarding the commercial ink jet business, which is an area we've wanted to get in."

In addition, both locations are attracting outside business. Morean said a new plant Jabil built in Boise is turning out to be too small.

"We're marketing that plant as an alternative to Silicon Valley," he said.

More recent acquisitions include Jabil's purchase last year of GET Manufacturing Inc., which is expected to add $300-million in annual revenues and which gives Jabil a presence in China and Hong Kong.

Jabil also operates in Malaysia, Mexico, Scotland and Brazil and has a plant under construction in Hungary. U.S. operations are in California, Massachusetts and Michigan, along with Idaho and Florida.

Time Warner's global reach

Time Warner also will gain new channels to extend its global reach if regulators approve the pending deal with America Online. The outlook in the Tampa Bay area is for growth, with or without AOL.

Already Tampa Bay is Time Warner Cable's second-largest division, trailing only New York City. The company has grown dramatically through the acquisition of other cable companies, including Jones Intercable in Tampa, Vision Cable in Clearwater and TCI Cablevision in Pasco and north Pinellas counties. It also is introducing new services such as digital cable and Road Runner cable Internet access.

Perhaps the fastest-growing local division is the smallest. Time Warner Telecom sells telephone and Internet services to businesses both directly and indirectly through wholesalers. The company owns a 1,200-mile fiber-optic network that stretches from St. Petersburg to Melbourne on the east coast.

Working the same territory as the cable division has been a big advantage for the Time Warner Telecom company, regional vice president Richard Santoro said.

"We do a lot of joint construction," he said. "You get a lot more bang for your buck when you don't have to redig the Courtney Campbell Causeway."

Two new companies are on the list of locally based companies for the first time. Paradyne Networks Inc., a Largo manufacturer of telecommunications equipment, went public last year and made its Times 50 debut at No. 8. Cryo-cell International Inc. edged into Times 50 consideration with its first year of more than $1-million in revenues. The tiny Clearwater company stores umbilical cord blood for its potential future benefit in treating diseases.

But the potential pool of locally based Times 50 companies is not expanding. So far this year only a handful of Florida companies have gone public, none of them from the Tampa Bay area.

© St. Petersburg Times. All rights reserved.