July 27 Contract electronics manufacturer
Celestica Inc warned its revenue would fall
this year due to weak demand and as it stops making BlackBerrys
for its biggest customer, Research In Motion Ltd
Celestica, which also reported that second-quarter profit
fell by almost half, said operating margins for the year would
be lower than expected.
Losing RIM as a customer forced Celestica, which also makes
products for IBM and Cisco Systems Inc, to take
steps to cut costs to improve its margins.
While it did not say what actions it would take, it expects
restructuring charges of $40 million and $50 million this year,
about half of which was booked in the second quarter.
The Toronto-based company also said it would spend $70
million to buy D&H Manufacturing Co, which makes precision
machined components mainly for the semiconductor industry.
PULLS GROWTH TARGETS
The company now expects revenue to fall in 2012 and
operating margins of 2.5 percent to 3.0 percent in the second
half of the year.
The company also withdrew its target of annual revenue
growth of 6 percent to 8 percent and its target of annual
operating margins of 3.5 percent to 4.0 percent.
Celestica said it expects adjusted earnings of 17 cents to
23 cents per share in the current quarter, which was short of
analysts' expectations of 24 cents a share, according to Thomson
However its revenue forecast of $1.6 billion to $1.7 billion
in the current quarter, with a 10 percent contribution from RIM,
was in-line with analysts' estimates of $1.67 billion.
Celestica's second-quarter revenue fell 5 percent to $1.74
billion, 17 percent of which came from RIM.
Profit in the quarter fell to $23.6 million, or 11 cents a
share, from $45.7 million, or 21 cents a share, a year earlier.
Celestica shares were trading down 1.35 percent at C$7.27 in
early trade Friday on the Toronto Stock Exchange.