Wow. Has it really been a year since I last wrote about specialty-printer maker Zebra Technologies (Nasdaq: ZBRA)? Yep. Well then, there's no better time to get back on the Zebra than today, as we look forward to the company's full-year 2007 earnings update, due out at the crack o' dawn Monday. Here's what to expect.

What analysts say:

  • Buy, sell, or waffle? Six analysts ride herd on Zebra, giving it four buy ratings and two holds.
  • Revenue. On average, they're looking for 8% quarterly sales growth to $226 million.
  • Earnings. Profits are predicted to add a penny for $0.43 per share.

What management says:
Another good reason to check back on Zebra today: Big changes are afoot. (Ahoof?) Earlier this month, management announced a significant change in how it does business: It will stop building its printers in-house and outsource manufacturing to Jabil Circuit (NYSE: JBL). Management says a key factor in the move is the fact that having Jabil build the printers in China will make it easier for Zebra to "serve high-growth territories more effectively."

Financially, I'd expect this to raise margins in the long term (thanks to comparative advantage, specialization, economies of scale, and similar Adam Smith-ish concepts). But in the short term, we're told to expect 650 "production-related" layoffs at Zebra as the shift in manufacturing progresses over the next 18 to 24 months. That will entail the usual restructuring and severance charges to earnings -- about $18 million this year, and another $6 million to $8 million in 2009.

What management does:
Why the shift in strategy? Well, gross margins have actually been doing pretty well at Zebra lately, but operating margins have been sliding for quite a while.

Margins

7/06

9/06

12/06

3/07

6/07

9/07

Gross

48.6%

48.0%

47.2%

47.4%

47.4%

47.6%

Operating

20.6%

20.2%

19.3%

19.0%

18.0%

17.8%

Net

15.1%

10.5%

9.3%

9.0%

8.5%

11.9%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Seeing as Zebra's customer list features such notable Southeast Asian-based names as Nissan (Nasdaq: NSANY) and Digital China, I guess the "party line" explanation for the outsourcing makes some sense. But I do wonder if building printers in China might make it less efficient to service the company's customers here at home. Let's see how it plays out.

What was Zebra up to when last we checked in on it? Find out in:

Fool contributor Rich Smith does not own shares of any company named above. Nissan is a Motley Fool Global Gains recommendation. The Motley Fool has a disclosure policy.