UPDATE 2-Celestica swings to profit on cost cutting

(Adds analyst and CEO comments; in U.S. dollars unless noted)

By Wojtek Dabrowski

TORONTO, July 24 (Reuters) - Contract electronics maker Celestica Inc (CLS.TO: Quote, Profile, Research, Stock Buzz)(CLS.N: Quote, Profile, Research, Stock Buzz) on Thursday said it swung to a second-quarter profit as further cost cuts offset slumping demand for its products.

Celestica, whose customers have included computer giants IBM (IBM.N: Quote, Profile, Research, Stock Buzz) and Hewlett-Packard (HPQ.N: Quote, Profile, Research, Stock Buzz), said it earned $39.8 million, or 17 cents a share, in the three months ended June 30. That was up from a loss of $19.2 million, or 8 cents a share, in the same period a year earlier.

Revenue fell to $1.88 billion from $1.94 billion in the quarter, and adjusted earnings were 17 cents per share compared to 2 cents a share a year earlier. The report was in line with the outlook the company provided in April.

The company, which also makes consumer electronics such as Microsoft Corp's (MSFT.O: Quote, Profile, Research, Stock Buzz) Xbox 360 videogame console, has struggled to right itself as demand slumps for the telecommunications and information-technology products it makes under contract. It has taken on new consumer business and aggressively cut costs to try mitigate those declines.

In the second quarter, Celestica said it reduced its cost of sales to $1.75 billion from $1.85 billion a year earlier.

"The company is certainly executing very well in admittedly a pretty choppy market," said Duncan Stewart, president of Duncan Stewart Asset Management in Toronto.

"Given the turbulence out there and the raft of other bad news coming out of the technology market, Celestica is actually doing a pretty good job."