Jamba shares fall, then rise after company cuts growth, jobs

Shares rose 4 cents to $2.61 after falling as low as $2.40 earlier in the day.

After the market closed Thursday, Jamba said it will close the stores in 2008 and end seven signed leases for unbuilt stores. As of April 22, the chain had 726 stores.

The Emeryville, Calif., company also said it would have to take a restructuring charge in the fiscal second quarter of about $750,000 due to the job cuts. All the jobs eliminated will be in support positions, the company said.

Jefferies & Co. analyst Jeff Farmer said in a note to investors that the job cuts could save the company $4 million a year in general and administrative costs.

Farmer said those costs were 15 percent of revenue in 2007, or twice the peer group average.

He added that the slowing development and job cuts will help boost earnings in 2008 and 2009.

"Strategic decisions announced Thursday are the right thing to do, but a clear signal that Jamba management does not expect business trends to improve meaningfully in the near future," he said.