Cape Cod Wind Farm Gets Green Light

It's been nine years in the making, but the Department of the Interior has finally given the go-ahead to a $1 billion project to develop U.S.'s first offshore wind farm in Nantucket Sound, off Cape Cod in Massachusetts.

At a press conference held April 28, at the Massachusetts Statehouse, Interior Secretary Ken Salazar announced his department's approval of the 130-turbine farm, which many alternative energy investors hope will give a kick start to the development of a wind power industry in the U.S. In announcing approval of the project, Salazar said this will be the first of many projects to be developed along the Atlantic coast.

The Cape Wind farm, which would cover some 24 square miles, still has some battles ahead of it as opponents, such as the Alliance to Protect Nantucket Sound, which was formed in 2001 to fight the proposal, are expected to go to court in a continued attempt to kill the project.

The project has seen environmental groups and politicians normally allied come down on different sides. The Sierra Club and Greenpeace are in favor as is Massachusetts's current Democratic governor Deval Patrick. The late Senator Ted Kennedy and his replacement, Republican Scott Brown have both been public in their opposition, with Brown issuing a press release immediately following the Salazar announcement.

The same day as Secretary Salazar's announcement, nawindpower.com, announced the commissioning of Germany's first offshore wind project which is expected to initially provide 60MW of power from 12 turbines, although Norbert Rottgen, Germany's federal environmental minister noted that the goal was to have an installed offshore capacity of 25,000MW by 2030. There are already wind farms operating off the coasts of Great Britain, Denmark, Sweden, the Netherlands, Ireland, Spain, and China.

Stocks: Worst week of the year, S&P 500 sinks 2%

NEW YORK (CNNMoney) -- U.S. stocks stumbled Friday, following a two-day rally, closing lower for a second straight week with the worst declines of the year.

The Dow tumbled 1.6%, while the S&P 500 sank 2% and the Nasdaq lost 2.3%.

At the start of the week,stocks were driven sharply lower by the ugly March jobs report and fresh worries about Europe's debt crisis. They rebounded a bit toward the middle of the week, but fell sharply again Friday as a slowdown in China's economy overshadowed a batch of better-than-expected earnings results.

The Dow Jones industrial average (INDU) dropped 137 points, or 1.1%, on Friday, while the S&P 500 (SPX) shed 17 points, or 1.3%, and Nasdaq (COMP) lost 44 points, or 1.5%.

The Chinese economy grew at an annual pace of 8.1% in the first quarter, the country's National Bureau of Statistics said Friday, marking a deceleration from an 8.9% growth rate in the prior quarter.

Fears are looming among many investors about a slowdown in China following years of breakneck growth, and what some believe is an inflating property bubble. Others, however, are more optimistic; the World Bank predicts the Chinese economy will slow to a 8.2% growth rate this year but rebound to 8.6% in 2013.

"Markets have been overemphasizing the risk of a hard landing in China," said Michelle Gibley, director of international research at Charles Schwab. "Growth did slow, and it was weaker than expected, but I think this could prove to be the trough, and economic growth will start to pick up."

Gibley highlighted the fact that the Chinese government has been easing its monetary policy, and expects those efforts to make an impact on the economy through the course of the year.

China's slower growth weighed broadly on the market, with over 90% of the Dow's 30 components trading lower, including JPMorgan Chase (JPM, Fortune 500), despite a first-quarter earnings and revenue beat.

The bank posted earnings of $1.31 a share, which were lower from a year ago, but above analyst estimates of $1.17. Shares dipped more than 3%.

Wells Fargo (WFC, Fortune 500) also topped expectations, reporting earnings of 75 cents a share on $21.6 billion in revenue, but the bank's stock also fell.

Investors to banks: Show me the growth

Shares of Bank of America (BAC, Fortune 500), Goldman Sachs (GS, Fortune 500) and Morgan Stanley (MS, Fortune 500), which all post results next week, were also lower.

"The bank earnings were decent, but we didn't see any home runs," said Peter Tuz, president at Chase Investment Counsel. "And China's news is casting a negative pall, so it's natural for investors to take some money off the table, especially after two strong days."

Investors were also skittish as the cost of insurance for Spanish debt rose to an all-time high, raising debt contagion fears in the Eurozone, said Wells Fargo Advisors analysts.

U.S. stocks posted the best gains in a month on Thursday, with the Dow and S&P 500 jumping 1.4%.

Economy: A lower than expected reading on the University of Michigan's Consumer Sentiment Index also weighed on the market. The index fell to 75.7 in April, from 76.2 in March. Analysts were expecting the index to slip to 76.1.

When will the Fed hike interest rates?

Meanwhile, the U.S. government reported that the Consumer Price Index, its key inflation metric, rose 0.3% in March, led by increases in gas prices, with a year-over-year increase of 2.7%. The reading was in line with analyst expectations.

Companies: Google (GOOG, Fortune 500) beat earnings expectations late Thursday, with a profit of $2.9 billion for the first quarter, up 61% from a year earlier. Google's revenue climbed 24% to $10.7 billion. The company also announced an unorthodox stock split. Shares of the search giant finished lower.

Coinstar (CSTR) shares jumped after the company noted "stronger than anticipated consumer demand at Redbox" on Thursday and raised its earnings outlook for the year.

Dow Chemical (DOW, Fortune 500) shares edged higher after the company announced late Thursday that it will raise its second-quarter dividend by 28% to 32 cents per share.

World markets: European stocks closed mixed. Britain's FTSE 100 (UKX) gained 0.3%, while the DAX (DAX) in Germany fell 2.4% and France's CAC 40 (CAC40) slipped 2.2%.

Asian markets ended higher. The Shanghai Composite (SHCOMP) gained 0.4%, the Hang Seng (HSI) in Hong Kong climbed 1.8% and Japan's Nikkei (N225) rose 1.2%.

Currencies and commodities: The dollar gained against the euro and the British pound, but slipped versus the Japanese yen.

Oil for May delivery slipped 81 cents to settle at $102.83 a barrel.

Gold futures for April delivery fell $20.40 to settle at $1,659.10 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 2%, from 2.05% late Thursday. 

Why Traders Roll Calls Into Spreads

By Chris McKhann

Three-way spreads are pretty common in options trading, but one that we have seen with more frequency of late is the roll of outright calls to call spreads.

Rolling call positions to later months and different strikes happens all the time, but we don't often see traders roll outright calls into call spreads. But there are several reasons that this strategy makes sense in the current environment.

First, let's look at an example of the trade, one that we saw recently in the iShares MSCI Japan Index Fund (EWJ). The trade involved 21,000 calls each in the March 11, June 11, and June 12 contracts. The March calls traded for $0.35 against open interest of 67,398. The June 11 calls were bought for $0.54, and the 12s were sold for $0.14. The volumes at both of those strikes were more than open interest.

So the trader was selling to close the position in March and replacing that bullish exposure with the call spread. The spread cost $0.40 and stands to make $0.60 if the EWJ is above $14 at the June expiration.

The first reason a trader would do this is concern for potential downside. The EWJ trade allows three additional months for the exchange-traded fund to get above $14 while spending only $0.05 for that extension.

But rolling positions outright, without creating a spread, faces a problem in what's known as the current "term structure." For the most part implied volatilities are low, as can be seen--at least partially--by the low VIX. The implied volatility for the EWJ is 17 percent, just above the lows of the year. The 10-day historical volatility, however, is 6 percent. And like the premium in the VIX futures, the implied volatility for most stocks increases with each expiration.

While the implied volatility of the March calls is 17 percent, it is 19 percent for the June 11 calls. The trader therefore reduces that implied volatility exposure by selling the 12 calls.

This illustrates clearly how using a spread limits the potential profits but also reduces the position's exposure to volatility. So while these trades do remain bullish postures, they do have lesser expectations.

Disclosure: None

The Good and Bad of Sprint’s iPhone Adventure

These days it is difficult for wireless carriers to stay competitive without offering Apple�s (NASDAQ:AAPL) iPhone. So last fall, when Sprint (NYSE:S) began selling the iOS device, investors hoped it would give mobile phone subscribers another reason to consider the struggling carrier.

It has. Sprint activated 1.8 million iPhones last quarter with 720,000 of those sales going to new subscribers. Although the number iPhone activations through Sprint was considerably lower than the 7.6 million iPhone activations by AT&T (NYSE:T) and the 4.2 million by Verizon (NYSE:VZ) during the same period, the iPhone helped keep Sprint in the game during the industry�s lucrative holiday shopping season.

It�s not clear, though, that the iPhone is a solid win for Sprint. Like every carrier that sells it, Sprint pays a higher subsidy for the iPhone than it does for other smartphones. And like other carriers who sell the device, Sprint lost money on sales of the phone. Sprint has in fact been losing money since 2007 and its iPhone sales pushed the company�s earnings gap to its widest in three years. What�s more, Sprint has committed to a four-year deal with Apple to sell the iPhone, even as it invests in upgrades to its 4G network.

Still, Sprint is counting on the iPhone to help it coax customers into purchasing higher-profit subscriber contracts at prices that will help lure clients from Verizon and AT&T. Sprint also will have to somehow convince its existing customers to spend more. The expectation is that the iPhone coupled with Sprint�s Simply Everything all-inclusive plan will appeal to many customers. The question how many and for how long?

Managing the costs of expensive network upgrades

Sprint was unable to capitalize on being the first U.S. carrier to offer 4G coverage, opting initially for a high-speed wireless standard called WiMAX instead of the now widely used LTE (Long Term Evolution) standard, which offers faster data speeds. Sprint is transitioning to 4G LTE coverage, but its first rollout of 4G LTE service won�t be available until mid-2012 and so far in only in six markets. Verizon has the most 4G LTE-capable markets and AT&T, which benefitted from being the first carrier to sell the iPhone, also will offer more LTE service by mid-2012.

T-Mobile–whose proposed sale to AT&T was opposed by the federal government and Sprint, and fell apart last year–says it is committed to its sizeable 4G CDMA-HSPA network.

Sprint may want to forge a network-sharing deal with T-Mobile, but the costs of iPhone subsidies and upgrades to its own network are already weighing heavily on its budget. And if Sprint does reach a deal with T-Mobile, it could incur significant costs to make the alliance work.

For the iPhone to prove its worth to Sprint investors, the company needs to make more impressive and profitable subscriber gains soon, and narrow its losses. If it doesn�t, it could look more like an acquisition target than a rebounding U.S. carrier.

Inflation Premiums Break Higher

Yesterday the US 30yr break-even (the difference between the nominal yield on a conventional bond and the real yield on an inflation-indexed bond of the same maturity) moved to a multi-week high, this suggests that the crowd is again becoming concerned about inflation. Ok, the absolute level of the breakeven is not so important rather, it is the general direction of the breakeven. From our perspective the general direction of the breakeven is up.

US 30yr Breakeven (short term)

click to enlarge

Sometimes it helps to look at things from a very long term perspective. Note how the US 30yr breakeven is more or less at a multi-month high. The market is clearly telling us that inflation is on the rise even if the official inflation rate stats are “benign”.

US 30yr Breakeven (long term)

So what four trades, in different markets, would best position a trader for a pick-up in inflation? Try these four ideas, long the AUDJPY, DBC, TBT, XLB.

Disclosure: Long FXA, DBC, TBT, XLB, XLE

5 Low-Beta Stocks That May Keep Surging

It's typically the highly volatile stocks that catch our attention, jumping and dropping sharply over time. We often think they may serve us best, too, as they seem to have the potential to give our portfolio a big sudden boost. Consider the quiet low-volatility stocks. Many of them have proven they can surge, too -- and better still, many seem like they still have plenty of surging left to do.

To get a handle on a stock's volatility, investors will frequently look at its beta, which measures how it moves in relation to the overall market. As an example, casino company Melco Crown Entertainment (Nasdaq: MPEL  ) sports a beta of 2.15, meaning that if the market advances 10%, it's likely, on average, to advance 2.15 times that, or 21.5%.

Of course, the opposite is true, too. A 20% drop in the market might mean a drop in the neighborhood of 43% for Melco. That volatility cuts both ways. In order to make the most of it, then, investors might seek high-beta stocks that seem to have a low probability of falling. Melco, for example, has been building a big presence in the gambling center of Macau and has been reporting strong revenue growth.

Low-volatility lovelies
On the opposite side of the beta spectrum are low-volatility stocks. It's important to remember that just because they don't move much when the market moves, that doesn't mean they don't move at all.

Below are a handful of companies that sport:

• Betas below 0.75, suggesting that they're not too volatile.
• Stock-price growth of at least 10% over the past year, suggesting that they have some oomph in them -- as the overall market has advanced just 1% or so in that period.
• Price-to-earnings ratios below 25, suggesting that they they're not wildly overvalued right now.

Company	Beta	52-week Stock-Price Change	P/E Ratio
Terra Nitrogen (NYSE: TNH  )	0.31	55%	11
New Gold (AMEX: NGD  )	(0.04)	17%	22
Altria (NYSE: MO  )	0.34	16%	17
Duke Energy (NYSE: DUK  )	0.31	19%	15
Southern (NYSE: SO  )	0.25	18%	18

Source: Motley Fool CAPS.

Digging into details
Fertilizer specialist Terra Nitrogen is poised to profit from continuing global agricultural demand, and it appears poised to continue growing as long as the farm sector remains hot. While many fear that the price of gold might represent a bubble, others remain interested in it. Gold producer New Gold�is worth consideration, as it has been making�some smart�deals and setting itself up for�low production costs. Duke Energy has disappointed some recently, facing rising costs and emission charges, but it's also investing in solar energy and seeing strong growth internationally.

Altria has been one of the market's best performers for many decades, but it's also a good reminder that past performance doesn't guarantee future results. The domestic tobacco giant still sports some compelling numbers, but it's also facing litigation, rising tobacco taxes, increased regulation, and a slowly shrinking base of smokers in the United States. Investors might want to look into its global counterpart Philip Morris International (NYSE: PM  ) instead. As developing nations develop, more people around the globe will be able to afford tobacco, and regulations in many locations won't be as constricting as they are here.

Meanwhile, electric company Southern may have posted some strong earnings growth, but its free cash flow isn't as robust as investors would like to see. Still, it pays a solid dividend above 4% and has been upping that regularly.

Don't dismiss low-beta stocks, as they may reward you well over time. You might even consider ignoring a stock's beta entirely, as there are plenty of more informative numbers to examine, such as simply revenue growth and profit margins.

Looking for promising investments? Here are "5 Stocks with Explosive Potential" and "4 Stocks as Cheap as They've Ever Been."

New Aches and Pains for Abbott

Late yesterday,�a�federal court jury in Marshall, Texas, ordered Abbott (ABT) to pay Johnson & Johnson (JNJ) $1.67 billion in damages after concluding that�Abbott�s�arthritis drug Humira infringed on a patent held by Johnson & Johnson.�Sanford C. Bernstein analyst Derrick Sung estimates that Abbott�s stock�might decline by a modest amount, which he variously�figures as�1-2% or�as 2-5%. He also believes that an appeal will likely reduce or overturn the damages, and�maintains�a target price of $53 for�Abbott, $6.18 above�this morning’s price of $47.82. Today, Abbott said that it would, indeed, appeal and asserted that it would owe nothing when a higher court reversed the verdict.

Intel: Barclays Cuts to Hold, Sees ‘Pause’ in Shares

I noted earlier some upbeat responses to SIA November chip date, but one analyst had a more extreme reaction.

Barclays Capital’s CJ Muse today cut his rating on Intel (INTC) shares to Equal Weight from Overweight in response to the data.

Chip revenue may not rise at all in 2012, or it could be up as much as 4%, which is worse than Muse’s prior view for a 2% to 5% rise this year.

He thinks overall that 2012 will be okay, with recovery in the latter part of the year:

We maintain our 1-Positive rating on the semiconductor industry, with the vision that the recovery will be more of a 2H12 story, led by a trough in 1Q12 and depleted inventories (we believe semis will be under-shipping end demand throughout 4Q and into 1Q) that will lead to outperformance in topline growth relative to end market customers beginning in the 2Q/3Q timeframe.

Muse thinks “stock selection” will be key. His top large cap picks for this year are Qualcomm (QCOM), Broadcom (BRCM), and Altera (ALTR), with Micron Technology (MU) and Skyworks Solutions (SWKS) and Atmel (ATML) his top mid-caps. His thinking is that “advanced logic and NAND flash” memory chips will lead the rise in orders in the latter part of the year.

As regards Intel, Muse is generally upbeat about the company’s prospects for its “Romley” server chip, for the “ultrabook” laptop program the company is promoting, and for Intel’s prospects for mobility. But The hard-disk drive issue will continue to weigh on the shares, causing a “pause” in the stock, he thinks.”

We are moving to the sidelines on Intel, as we see potential headwinds in the company�s core PC business in 1H12. With HDD shortages likely impacting 1H12 PC demand, coupled with expectations that we could see a slip in consumer end demand into Win 8 launch in 3Q/4Q12, we think Intel will probably need to lower its utilization rates in 1H12, thereby likely weighing on GM and EPS estimates and thus driving below-consensus results. [We remain] remain firm in our belief that Intel is the best at chip manufacturing in the world and that this gives the company a shot at some success in mobility starting in 2013.

Muse cut his estimate for Intel’s 2012 revenue to $54.07 billion from a prior $55.22 billion, while cutting his EPS estimate to $2.32 per share from $2.45 previously.

Intel shares today are up 44 cents, almost 2%, at $24.69.

1 Thing Worth Watching at AmerisourceBergen

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on AmerisourceBergen (NYSE: ABC  ) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, AmerisourceBergen generated $1,096.5 million cash while it booked net income of $706.0 million. That means it turned 1.4% of its revenue into FCF. That doesn't sound so great.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at AmerisourceBergen look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 19.4% of operating cash flow coming from questionable sources, AmerisourceBergen investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 13.4% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 12.9% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

• Add AmerisourceBergen to My Watchlist.

Energy Investing is Worth Your Time and Effort

Last week, I received a question that really stood out in my mailbox.

It was a variation of similar questions that typically come in from.

Now, we can't advise individuals on how to manage their money, but we can let them know the obvious secret about investing in the markets. The question had been sent by a man named John who wanted to know the following

"I am starting out with such small amounts of money to invest. Is investing in the energy markets even worth my time and effort?"

Simply put, the answer is a resounding "Yes."

And here's why.

If you have money sitting in a checking account right now, it's earning nothing.

If your cash is in a savings account, you're making a little more than 1% annually on that money (if you're lucky).

So sure, your money is stagnant. You probably knew that. But it gets even worse...

See, the buying power of your cash is falling, even as I type this letter, due to consumer inflation.

So you can sit back and watch your hard-earned cash whittled away to nothing...

Or you can fight that assault on your wallet by investing in the most profitable sector of all time.

Last week, I talked about the Alerian MLP Index (NYSE: AMJ), which tracks the performance of the energy Master Limited Partner (MLP) sector. This electronic trading note (ETN) pays a current yield of 5% annually, and has appreciated by 100% in the last three years.

I showed you how a $10,000 investment back in March 2009 would be worth roughly $23,500 today.

But $10,000 is a lot of money for many investors. (It's certainly a lot for me.)

So, I did the math again, but this time starting with a more modest amount. And the results are still impressive.

If you had purchased 25 shares for $494 back in early 2009 and reinvested the dividends, your "small amount" would be worth $1,158.51 today.

That's a 134% gain.

On the other hand, if you'd have kept it parked "safely" in a bank account at 1.5% over three years, your $500 would be worth roughly $522.83 after three years.

And here's where it gets interesting.
There isno doubt that 2012will bethe biggest yeareverin the energy markets. To subscribe to Oil and Energy Investor, click here.
(Dennis/Lauren: This is web copy only. Let's try off set it in somehow in a box I know that column is shaded to begin with)

That $522.83 today has the same buying power as $497 in 2009.

So, your money has gained nothing due to consumer inflation. And we're being a little generous with that interest rate.

So, is investing even a modest amount worth your time and effort?

Absolutely.

But here's the thing.

You don't have to put a ton of time and effort into investing if you know where to look.

Keith Fitzgerald has done a superb job in identifying equities and funds that offer the opportunity to turn any amount of money into big gains.

All you need is patience.

The energy sector is experiencing one of the greatest shifts in the history of investing. We've discussed in the previous question our timeline for natural gas. Just a few hundred bucks in the right companies today could be huge gains down the line.

P.S.Today you canget access to Kent's favoritemoney-making energy playsat a steep discount. Less than $50 a year won't break anyone's bank.
SoI invite you to take a glance at his latest research. You can see it here now.

Related New and Articles:

• Oil and Energy Investor: The Iranian Oil Spike
• Money Morning: All You Need to Know About Iran, $200 Oil, and $6.00 Gas
• Money Morning: 2012 Oil Price Outlook: How to Profit From $150 Oil
• Money Morning:
  Prepare for Iran's Market Chaos with the United States Oil Fund (NYSE: USO)

Why Debt Is Going to Continue to Be Problem for U.S.

Officials at the Federal Reserve and in many other leadership positions around the world believe that liquidity is the solution to our current woes. And, if the amount of liquidity that is in the anking and financial markets is not enough to resolve our problems then more liquidity is certainly the answer.

This is behind QE2, and this is behind most of the effort to resolve the sovereign debt crisis in Europe.

What does liquidity allow you to do? It allows you to sell assets into the marketplace.

However, selling assets into the marketplace does not solve your problems if the price at which you sell the assets is substantially below the accounting value of the assets on your balance sheet. In such cases, having liquid markets in which to sell assets may allow you to more than wipe out your equity and leave you unable to pay off your debts.

There are two ways to counter this problem. The first is to inflate prices so that the real value of the debt declines which reduces the amount of leverage you have on your books. The second is to create income and wealth so that equity increases relative to the debt outstanding thereby reducing leverage.

The people advocating the injection of more liquidity into the financial system hope to spur bank lending and thereby stimulate economic growth. Those that are concerned with the creation of more and more liquidity argue that this first group of people really just want to create inflation and reduce the real value of the debt.

The problem I see unfolding is that the economy is expanding and will continue to expand in 2011, but it will not expand in such a way as to stimulate sufficient income growth and wealth creation so as to lower the debt loan many people are bearing. As a consequence, the further liquefying of the banking and financial markets will just benefit those who are not too highly leveraged…generally the financially better off in society…and continue to depress those who are highly leveraged.

In terms of economic growth, the economy is expanding. However, by historical standards, the year-over-year rate of growth of real Gross Domestic Product is substantially below the general recovery pattern. In the year-over-year rates of growth in 2010 were 2.4%, 3.0%, and 3.4% in the first, second and third quarters, respectively. Historically, at this stage of the recovery, the growth rates are usually much greater.

The problems come when we observe some very basic facts with respect to economic performance. First, although Industrial Production has recovered from the lows reached during the recession it has not come close to reaching the peak it attained before the recession set in. Second, the capacity utilization of our manufacturing has recovered, yet it still lies well below its previous peak (which is the lowest peak achieved since the statistical series was begun in the 1960s).

Finally, even though unemployment dropped last month, under-employment continues to be extremely high as I estimate that one out of every four or one out of every five individuals of employment age are either unemployed, working part time but would like to work full time, or have dropped out of the work force. This phenomena is captured in the data on the Civilian Participation rate. Note, that this rate is substantially below the level it was before the Great Recession began in December 2007 and is also even further below the level reached before the 2001 recession. Under-employment in the United States has been growing, almost steadily, since the latter part of the 1960s.

Even though corporate profits are rising dramatically, even though many large corporations are acquiring other corporations at a very rapid pace, even though commodity prices are going through the ceiling, even though the big banks are doing very well, thank you, there seems to be a real structural problem in the United States. Liquidity is helping a lot of people but it is not the people we are talking about in this

Disclosure: None

Stocks Finish With Surprise Bounce

Stocks finished a choppy trading session sharply higher on Tuesday as the prospect of a new plan to recapitalize European banks fueled a furious rally in the final hour.

The Dow Jones Industrial Average saw a nearly 400-point turnaround, surging from 10,432 shortly after 3 p.m. ET to settle up 153 points, or 1.4%, at 10,809 when the closing bell sounded.

Find out what stocks Link and Cramer are trading before they trade them

The S&P 500 finished up 25 points, or 2.2%, at 1124. The index dropped into bear market territory during the session, touching a one-year intraday low of 1,075 in the morning that put the index down 21.4% from the year's closing high of 1,364 in late April. The tech heavy Nasdaq gained 67 points, or 3% at 2405. What seemed like a rally after a morning speech by Federal Reserve Chairman Ben faded by the afternoon. The three major averages were languishing in negative territory prior to the turnaround that followed a Financial Times report that European finance ministers are debating ways to cooperate and recapitalize eurozone banks. U.S. banks, battered in recent days, led the turnaround with Morgan Stanley(MS), Goldman Sachs(GS) and Bank of America(BAC) all climbing into the positive territory by the close."Positive European headlines have been few and far between and ultimately, today's rally was spurred by a headline and not the actual implementation of a policy decision," wrote Dan Greenhaus, chief global strategist from BTIG. "If we can rally off of the former, imagine what the latter might do?"Earlier, Bernanke left the door open to further fiscal policy in his prepared remarks to the Joint Economic Committee, although he also said the central bank has no imminent plans for a third round of quantitative easing. His remarks echoed Wall Street's frustrations that Washington and eurozone leaders have not done enough to address the sluggish state of the global economy."Whenever the Fed chairman makes a statement to help, the stock market usually sees a bounce," says Komal Sri-Kumar, chief global strategist at the investment firm TCW. He noted that the rally that immediately followed Bernanke's speech today was especially short because investors have lost faith in the ability of monetary easing to help the economy. Before the late-day news that seemed to stick another "band-aid" on Europe's debt problems, the focus was largely on a latest string of disappointing news from the region. European leaders said they have pushed back their decision regarding additional aid to Greece after Oct. 13. The decision increased fears that Greece may not receive its next installment of bailout funds after the country announced it will not meet its deficit reduction target for 2011. Most analysts believe that Greece is headed toward an orderly default or some sort of restructuring debt plan.European bank stocks plummeted Tuesday as investors sought to minimize their exposure to continued uncertainty in the eurozone. London's FTSE lost 2.6%, and Germany's DAX sunk 3%. Japan's Nikkei Average closed off by 1.1%, and Hong Kong's Hang Seng dropped 3.4%.Also on Tuesday, Goldman Sachs slashed its global growth outlook for 2011 and 2012, projected a mild recession in the eurozone area. Goldman now anticipates global growth of 3.8% in 2011 and of 3.5% in 2012, compared with earlier estimates for growth of 3.9% and 4.2%, respectively, according to a Bloomberg report."Rarely has the economic outlook been so sensitive to the decisions of politicians on both sides of the Atlantic," Deutsche Bank economists said in a note. "Whether it is the complexities of reaching unanimous agreement among 17 euro area members regarding the resolution of the sovereign debt crisis or the increasingly polarized U.S. political scene, political risk may be the greatest source of shocks to the global economy today."

1 2 Next › Last »

Trading was heavy with 6.9 billion shares on the New York Stock Exchange and 3 billion on the Nasdaq. Market breadth on the NYSE was roughly split.

Economic data was thin on Tuesday with the Commerce Department reporting a 0.2% decline in August factory orders, slightly larger than the dip of 0.1% that economists had been expecting, according to Briefing.com. In July, orders grew by 2.4%.

As equities bounced, Treasury yields rose. The benchmark 10-year Treasury fell 21/32, lifting the yield to 1.833%. The dollar was weakening against a basket of currencies, with the dollar index slipping 0.5%.The November crude oil contract was down $1.94 cents to settle at $75.67 a barrel. Elsewhere in commodity markets, gold for December delivery shed $41.70 to trade at $1,616 an ounce.Following Apple's(AAPL) announcement of the iPhone 4S, shares of the company shed 0.6% to close at $372.50. The new smartphone, which will run on both the GSM and CDMA networks for use around the world, will contain the same chip used in the iPad 2 and a new antenna designed to minimize dropped calls. Even with these new features, however, the phone received a lukewarm reaction from those expecting Apple to unveil a newly designed iPhone 5 in the company's conference call.Shares of Deutsche Bank(DB) gained 4.9% to $34.45 after falling earlier in the session. The bank said it will miss its 2011 pretax profit target from its core businesses of €10 billion ($13.21 billion).UBS(UBS) said it anticipates modest third-quarter profit despite losing $2.3 billion from a rogue trader last month. The stock surged 9.4% to $11.55 alongside other bank stocks late day.Ford(F) and the United Auto Workers announced that they reached a tentative agreement. Details will be provided during a news conference scheduled for later in the morning. Ford's stock climbed 7.6% to $10.08..

>To order reprints of this article, click here: Reprints « First ‹ Previous 1 2

Top Stocks For 2012-1-10-7

Company�s Performance Substantially Ahead of Long-Term Growth Goals

ST. PETERSBURG, FL–(CRWENEWSWIRE) — Jabil Circuit, Inc. (NYSE:JBL), reported its preliminary, unaudited financial results for the fourth quarter and full fiscal 2011, ended August 31, 2011, announcing fiscal year revenue growth of 23 percent, operating income growth of 77 percent and earnings growth of 126 percent. �Posting a record quarter and fiscal year in the present environment is remarkable,� said Timothy L. Main, President and CEO of Jabil. �Demand for our expertise in managing global supply chain networks remains robust, especially now as customers increasingly focus on growth in developing economies.�

Jabil believes that its strength in managing complex products and process technologies on a global scale has been important to exceeding its long-term growth targets in fiscal 2011. Jabil achieved growth through a combination of market share gains, new customer wins and new production from its existing customer base. Management indicated that their success rate allowed them to grow their Diversified Manufacturing Services business 43 percent in fiscal 2011, well above the long-term growth target of 20 to 30 percent per year. Performance in Enterprise & Infrastructure and High Velocity business areas were also above long-term growth targets, posting revenue growth of 18 percent and 11 percent, respectively.

�In addition to progress against our long-term objectives, we generated significantly higher cash flow in fiscal 2011, enabling the return of $262 million in capital to shareholders via our dividend and share-repurchase program,� said Main. Jabil generated $828 million in cash flow from operations over the course of the year. Business expansion combined with a focus on lean manufacturing principles and capital efficiency continue to be areas of emphasis for the company.

FISCAL 2011 HIGHLIGHTS

Revenue from Diversified Manufacturing Services flourished by 43 percent over fiscal 2010.

• Specialized Services revenue improved 76 percent from fiscal 2010.

  Healthcare & Instrumentation revenue increased 31 percent from fiscal 2010.

  Industrial & Clean Tech revenue grew 19 percent from fiscal 2010.

Enterprise & Infrastructure revenue increased by 18 percent over fiscal 2010.
High Velocity revenue expanded 11 percent over fiscal 2010.
Lean manufacturing savings increased approximately 400 percent.
Generated $828 million in cash flow from operations during the fiscal year.
Return on invested capital of 26 percent.
Return on equity of 24 percent.
Jabil returned $62 million to shareholders via dividends during fiscal 2011.
Repurchased 11.5 million shares of common stock during the quarter.

(Definitions used: �GAAP� means U.S. generally accepted accounting principles. Jabil defines core operating income as GAAP operating income before amortization of intangibles, stock-based compensation expense and related charges, restructuring and impairment charges, goodwill impairment charges, certain distressed customer charges, settlement of receivables and related charges and loss on disposal of subsidiaries. Jabil defines core earnings as GAAP net income before amortization of intangibles, stock-based compensation expense and related charges, restructuring and impairment charges, goodwill impairment charges, certain distressed customer charges, settlement of receivables and related charges, loss on disposal of subsidiaries, certain other expenses, net of tax and certain deferred tax valuation allowance charges. Jabil defines core earnings per share as core earnings divided by the weighted average number of outstanding shares determined under GAAP. Jabil calculates core return on invested capital by annualizing its after-tax core operating income for its most recently-ended quarter and dividing that by a two quarter average net invested capital base. Jabil reports core operating income, core earnings, core earnings per share and core return on invested capital to provide investors an additional method for assessing operating income, earnings, earnings per share and return on invested capital from what it believes are its core manufacturing operations. See the accompanying reconciliation of Jabil�s core operating income to its GAAP operating income, Jabil�s core earnings and core earnings per share to its GAAP net income and GAAP earnings per share, its calculation of core return on invested capital and additional information in the supplemental information.)

QUARTERLY RESULTS

Q4 2011

Q4 2010

Net revenue

$4.3 billion

$3.9 billion

GAAP operating income

$165.6 million

$103.0 million

GAAP net income

$114.3 million

$58.7 million

GAAP diluted earnings per share

$0.52

$0.27

GAAP Return on Invested Capital

26%

15%

Core operating income

$187.2 million

$157.0 million

Core earnings

$136.3 million

$112.1 million

Core diluted earnings per share

$0.62

$0.52

Core Return on Invested Capital

30%

26%

FISCAL YEAR RESULTS

FISCAL 2011

FISCAL 2010

Net revenue

$16.5 billion

$13.4 billion

GAAP operating income

$578.7 million

$327.6 million

GAAP net income

$381.1 million

$168.8 million

GAAP diluted earnings per share

$1.73

$0.78

Core operating income

$715.2 million

$490.9 million

Core earnings

$516.3 million

$330.4 million

Core diluted earnings per share

$2.34

$1.52

Business Update

�While macroeconomic conditions remain uncertain, our expectation for continuing growth underscores our belief in the benefit of diversification and the sustained demand for our services,� said Jabil CEO Timothy Main. �Customers are most concerned with driving higher levels of performance from their supply chain networks. We intend to drive superior levels of customer loyalty by giving them peerless performance throughout our organization.�

Fiscal Q1 2012 Guidance Range

Y/Y Fiscal Q1 2011

Net revenue

$4.3 billion - $4.5 billion

8%

Core operating income

$185 million - $205 million

7%

Core earnings per share

$0.62 to $0.70 per diluted share

8%

GAAP earnings per share

$0.52 to $0.60 per diluted share

14%

(GAAP earnings per share for the first quarter of fiscal 2012 are currently estimated to include $0.02 per share for amortization of intangibles and $0.08 per share for stock-based compensation).

Annual growth based on mid-point of guidance.

FORWARD LOOKING STATEMENT: This news release contains forward-looking statements, including those regarding our anticipated financial results for our fourth fiscal quarter and fiscal year 2011; the demand for global supply chain services; the focus of our customers on growth in developing economies; our emphasis on business expansion combined with a focus on lean manufacturing principles and capital efficiency; the uncertainty of macroeconomic conditions; our expectation for continuing growth; our belief in the benefit of diversification and the sustained demand for our services; customers’ concern with driving higher levels of performance from their supply chain networks; our intention to drive superior levels of customer loyalty by giving customers peerless performance throughout our organization and our currently expected first quarter of fiscal year 2012 net revenue, core operating income, core and GAAP earnings per share results and the components thereof. The statements in this news release are based on current expectations, forecasts and assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include, but are not limited to: our determination as we finalize our financial results for our fourth fiscal quarter and fiscal year 2011 that our financial results and conditions differ from our current preliminary unaudited numbers set forth herein; adverse changes in the demand, or expected demand, of our customers; changes in the demand for global supply chain services; changes in the focus of our customers; changes in our emphasis and focus on business expansion, lean manufacturing principles and capital efficiency; the expected new business opportunities in targeted segments failing to arise; changes in macroeconomic conditions, both in the U.S. and internationally; our financial performance during and after the current economic conditions; our ability to maintain and improve costs, quality and delivery for our customers; risks and costs inherent in litigation; whether our realignment of our capacity will adversely affect our cost structure, ability to service customers and labor relations; our ability to take advantage of perceived benefits of offering customers vertically integrated services; changes in technology; competition; anticipated growth for us and our industry that may not occur; managing rapid growth; managing rapid declines in customer demand that may occur; our ability to successfully consummate acquisitions and divestitures; managing the integration of businesses we acquire (including, with respect to the acquisition of the Italian and French sites, potential unknown liabilities and the costs associated with addressing potential reduced business activity at these sites); risks associated with international sales and operations; retaining key personnel; our dependence on a limited number of large customers; business and competitive factors generally affecting the electronic manufacturing services industry, our customers and our business; other factors that we may not have currently identified or quantified; and other risks, relevant factors and uncertainties identified in our Annual Report on Form 10-K for the fiscal year ended August 31, 2010, subsequent Reports on Form 10-Q and Form 8-K and our other securities filings. Jabil disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Supplemental Information: The financial results disclosed in this release include certain measures calculated and presented in accordance with GAAP. In addition to the GAAP financial measures, Jabil provides supplemental, non-GAAP financial measures to facilitate evaluation of Jabil�s core operating performance. The non-GAAP financial measures disclosed in this release exclude certain amounts that are included in the most directly comparable GAAP measures. The non-GAAP or core financial measures disclosed in this release do not have standard meanings and may vary from the non-GAAP financial measures used by other companies. Management believes core financial measures (which exclude the effects of the amortization of intangibles, stock-based compensation expense and related charges, restructuring and impairment charges, goodwill impairment charges, certain distressed customer charges, settlement of receivables and related charges, loss on disposal of subsidiaries, certain other expenses, net of tax and certain deferred tax valuation allowance charges) are a useful measure that facilitates evaluating the past and future performance of Jabil�s ongoing operations on a comparable basis. Jabil reports core operating income, core return on invested capital, core earnings and core earnings per share to provide investors an additional method for assessing operating income, earnings and earnings per share from what it believes are its core manufacturing operations. Included in this release are Condensed Consolidated Statements of Operations as well as a reconciliation of the disclosed core financial measures to the most directly comparable GAAP financial measures.

Company Conference Call Information: Jabil will hold a conference call to discuss the fourth fiscal quarter 2011 earnings today at 4:30 p.m. ET live on the Internet at http://www.jabil.com. The call will be recorded and archived on the web at http://www.jabil.com. A taped replay of the conference call will also be available September 27, 2011 at approximately 7:30 p.m. ET through midnight on October 4, 2011. To access the replay, call (800) 642-1687 from within the United States, or (706) 645-9291 outside the United States. The pass code is: 99762902. An archived webcast of the conference call will be available at http://www.jabil.com/investors/.

About Jabil

Jabil is an electronic product solutions company providing comprehensive electronics design, manufacturing and product management services to global electronics and technology companies. Offering complete product supply chain management from facilities in 25 countries, Jabil provides comprehensive, individualized-focused solutions to customers in a broad range of industries. Jabil common stock is traded on the New York Stock Exchange under the symbol, �JBL�. Further information is available on Jabil�s website: jabil.com.

JABIL CIRCUIT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
		August 31,				August 31,
		2011				2010
ASSETS
Current assets:
Cash and cash equivalents		$	888,611			$	744,329
Trade accounts receivable, net			1,100,926				1,408,319
Inventories			2,227,339				2,094,135
Prepaid expenses and other current assets			868,892				349,165
Income taxes receivable			33,855				35,560
Deferred income taxes			15,737				22,510
Total current assets			5,135,360				4,654,018
Property, plant and equipment, net			1,641,335				1,451,392
Goodwill and intangible assets, net			125,305				132,568
Deferred income taxes			74,989				55,101
Other assets			80,951				74,668
Total assets		$	7,057,940			$	6,367,747
LIABILITIES AND EQUITY
Current liabilities:
Current installments of notes payable and
long-term debt		$	74,160			$	167,566
Accounts payable			2,885,168				2,741,719
Accrued expenses			892,391				672,252
Income taxes payable			32,987				19,236
Deferred income taxes			5,182				4,401
Total current liabilities			3,889,888				3,605,174
Notes payable and long-term debt,
less current installments			1,112,594				1,018,930
Income tax liability			88,451				86,351
Deferred income taxes			15,761				1,462
Other liabilities			67,423				63,058
Total liabilities			5,174,117				4,774,975
Equity:
Jabil Circuit, Inc. stockholders� equity
Common stock			225				220
Additional paid-in capital			1,649,431				1,541,507
Retained earnings			441,793				123,303
Accumulated other comprehensive income			194,706				122,062
Treasury stock at cost			(419,035	)			(209,046	)
Total Jabil Circuit, Inc. stockholders� equity			1,867,120				1,578,046
Noncontrolling interests			16,703				14,726
Total equity			1,883,823				1,592,772
Total liabilities and equity		$	7,057,940			$	6,367,747

JABIL CIRCUIT, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except for per share data) (Unaudited)
		Three months ended						Twelve months ended
		August 31,			August 31,			August 31,			August 31,
		2011			2010			2011			2010
Net revenue		$	4,280,295		$	3,860,933		$	16,518,827		$	13,409,411
Cost of revenue			3,951,092			3,573,425			15,264,257			12,405,267
Gross profit			329,203			287,508			1,254,570			1,004,144
Operating expenses:
Selling, general and administrative			152,204			160,512			590,572			589,738
Research and development			6,209			6,632			25,034			28,085
Amortization of intangibles			5,230			5,980			22,051			25,934
Restructuring and impairment charges			-			2,512			628			8,217
Loss on disposal of subsidiaries			-			8,882			23,944			24,604
Settlement of receivables and related charges			-			-			13,607			-
Operating income			165,560			102,990			578,734			327,566
Interest, net and other			24,527			19,704			97,547			80,299
Income before income taxes			141,033			83,286			481,187			247,267
Income tax expense			25,492			23,910			98,229			76,501
Net income			115,541			59,376			382,958			170,766
Net income (loss) attributable to noncontrolling
interests, net of income tax expense			1,253			685			1,895			1,926
Net income attributable to Jabil Circuit, Inc.		$	114,288		$	58,691		$	381,063		$	168,840
Earnings per share:
Income attributable to the stockholders of
Jabil Circuit, Inc.:
Basic		$	0.54		$	0.27		$	1.78		$	0.79
Diluted		$	0.52		$	0.27		$	1.73		$	0.78
Weighted average shares outstanding:
Basic			212,753			214,011			214,502			214,332
Diluted			219,494			215,997			220,719			217,597

JABIL CIRCUIT, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)
							Twelve months ended
							August 31, 2011							August 31, 2010
Cash flows from operating activities:
Net income							$ 382,958							$ 170,766
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization							319,179							283,284
Recognition of stock-based compensation expense							76,230							104,609
Settlement of receivables and related charges							12,673							�
Loss on disposal of subsidiaries							23,944							18,671
Other, net							12,804							20,036
Change in operating assets and liabilities, exclusive of net assets acquired:
Trade accounts receivable							48,232							(247,133		)
Inventories							(158,545			)				(969,348		)
Prepaid expenses and other current assets							(212,265			)				(143,639		)
Other assets							3,205							448
Accounts payable and accrued expenses							305,814							1,172,770
Income taxes payable							13,780							16,946
Net cash provided by operating activities							828,009							427,410
Cash flows from investing activities:
Cash paid for business and intangible asset acquisitions, net of cash acquired							3,985							�
Acquisition of property, plant and equipment							(458,989			)				(398,425		)
Proceeds from sale of property, plant and equipment							23,483							10,280
Cost of receivables acquired, net of cash collections							(557			)				�
Proceeds from disposal of available for sale investments							5,800							�
Notes receivable from sale							�							(24,972		)
Proceeds from disposal of subsidiaries, net of cash							�							(27,140		)
Net cash used in investing activities							(426,278			)				(440,257		)
Cash flows from financing activities:
Repayments, net of borrowings, under debt agreements							(14,597			)				(49,435		)
Net proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan							31,644							10,744
Treasury stock minimum tax withholding related to vesting of restricted stock							(9,763			)				(5,505		)
Payments to acquire treasury stock							(200,226			)				�
Dividends paid to stockholders							(60,411			)				(59,869		)
Debt issuance costs							(14,549			)				�
Net proceeds from issuance of ordinary shares of certain subsidiaries							�							586
Bank overdraft of subsidiary							�							3,067
Excess tax benefit of options exercised							180							132
Net cash used in financing activities							(267,722			)				(100,280		)
Effect of exchange rate changes on cash and cash equivalents							10,273							(18,816		)
Net increase (decrease) in cash and cash equivalents							144,282							(131,943		)
Cash and cash equivalents at beginning of period							744,329							876,272
Cash and cash equivalents at end of period							$ 888,611							$ 744,329
JABIL CIRCUIT, INC. AND SUBSIDIARIES
SUPPLEMENTAL DATA
RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES
(In thousands, except for per share data)
(Unaudited)
		Three months ended							Twelve months ended
		August 31,			August 31,				August 31,			August 31,
		2011			2010				2011			2010
Operating income (GAAP)		$	165,560		$ 102,990				$ 578,734			$			327,566
Amortization of intangibles			5,230		5,980				22,051						25,934
Stock-based compensation expense and related charges			16,376		36,629				76,230						104,609
Restructuring and impairment charges			-		2,512				628						8,217
Settlement of receivables and related charges			-		-				13,607						-
Loss on disposal of subsidiaries			-		8,882				23,944						24,604
Core operating income (Non-GAAP)		$	187,166		$ 156,993				$ 715,194			$			490,930
Net income (GAAP)		$	114,288		$ 58,691				$ 381,063			$			168,840
Amortization of intangibles, net of tax			5,213		5,968				21,998						25,887
Stock-based compensation expense and related charges, net of tax			16,790		36,006				75,068						102,719
Restructuring and impairment charges, net of tax			-		2,537				628						8,314
Settlement of receivables and related charges, net of tax			-		-				13,607						-
Loss on disposal of subsidiaries, net of tax			-		8,882				23,944						24,604
Core earnings (Non-GAAP)		$	136,291		$ 112,084				$ 516,308			$			330,364
Earnings per share: (GAAP)
Basic		$	0.54		$ 0.27				$ 1.78			$			0.79
Diluted		$	0.52		$ 0.27				$ 1.73			$			0.78
Core earnings per share: (Non-GAAP)
Basic		$	0.64		$ 0.52				$ 2.41			$			1.54
Diluted		$	0.62		$ 0.52				$ 2.34			$			1.52
Common shares used in the calculations of earnings per share (GAAP):
Basic			212,753		214,011				214,502						214,332
Diluted			219,494		215,997				220,719						217,597
Common shares used in the calculations of earnings per share (Non-GAAP):
Basic			212,753		214,011				214,502						214,332
Diluted			219,494		215,997				220,719						217,597

JABIL CIRCUIT, INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA

RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP MEASURES

(In thousands)

CALCULATION OF RETURN ON INVESTED CAPITAL AND

CORE RETURN ON INVESTED CAPITAL

The Company calculates (1) “Return on Invested Capital” by annualizing its “after-tax GAAP operating income” for its most recently-ended quarter and dividing that by a two quarter average of its “net invested capital asset base” and (2) “Core Return on Invested Capital” by annualizing its “after-tax non-GAAP core operating income” for its most recently-ended quarter and dividing that by a two quarter average of its “net invested capital asset base.”

The Company calculates: (1) its “after-tax GAAP operating income” by subtracting a certain tax effect (the calculation of which is explained below) from its GAAP operating income and (2) its “after-tax non-GAAP core operating income” by subtracting a certain tax effect (the calculation of which is explained below) from its non-GAAP core operating income. See elsewhere in this earnings release for a reconciliation of the Company’s non-GAAP core operating income to its GAAP operating income.

The Company calculates “net invested capital asset base” as the sum of the averages (the calculation of which are explained below) of (1) its stockholders� equity, (2) the non-current portion of its notes payable and long term debt and (3) the current portion of its notes payable and long term debt, less the average (the calculation of which is explained below) of its cash and cash equivalents.

The following table reconciles (1) “Return on Invested Capital,” as calculated using “after-tax GAAP operating income” to (2) “Core Return on Invested Capital,” as calculated using “after-tax non-GAAP core operating income”:

		Three months ended
		August 31,
		2011
Numerator:
Operating income (GAAP)		$	165,560
Tax effect (1)			(25,478)
After-tax operating income			140,082
		x4
Annualized after-tax operating income		$	560,328
Core Operating Income (Non-GAAP)		$	187,166
Tax effect (2)			(25,083)
After-tax core operating income			162,083
		x4
Annualized after-tax core operating income		$	648,332
Denominator:
Average total Jabil Circuit, Inc. stockholders� equity (3)		$	1,900,238
Average notes payable and long-term debt, less current installments (3)			1,109,895
Average current installments of notes payable and long-term debt (3)			77,305
Average cash and cash equivalents (3)			(899,878)
Net invested capital asset base		$	2,187,560
Return on Invested Capital (GAAP)			25.6%
Adjustments noted above			4.0%
Core Return on Invested Capital (Non-GAAP)			29.6%

(1) This amount is calculated by adding the amount of income taxes attributable to its operating income (GAAP) and its interest expense.

(2) This amount is calculated by adding the amount of income taxes attributable to its core operating income (Non-GAAP) and its interest expense.

The average is based on the addition of the account balance at the end of the most recently-ended quarter to the account balance at the end of the prior quarter and dividing by two.

Contact:Jabil Circuit, Inc.Investor & Media Contact:Beth Walters, 727-803-3511Senior Vice President, Investor Relations & Communicationsbeth_walters@jabil.com

THIS IS NOT A RECOMMENDATION TO BUY OR SELL ANY SECURITY!