Celestica profit plunges as Blackberry exits

Reuters News
Posted: Apr 23, 2013 7:14 AM
Celestica profit plunges as Blackberry exits

(Reuters) - Contract electronics manufacturer Celestica Inc reported a 76 percent fall in first-quarter profit, hit by the loss of its once-biggest customer, Blackberry.

Revenue fell 19 percent to $1.37 billion as the results excluded revenue from Blackberry for the first time in more than three years.

The company earned 16 cents per share on an adjusted basis, just ahead of the average analyst estimate of 15 cents, according to Thomson Reuters I/B/E/S.

Celestica, which makes servers and other products for manufacturers such as IBM and Cisco Systems Inc, said in June it would stop making products for Blackberry as the Canada-based smartphone maker made changes in its supply chain to lower costs.

Blackberry, previously Research in Motion, contributed 19 percent, or $321.3 million, to Celestica's first-quarter revenue last year.

Toronto-based Celestica said restructuring costs associated with the loss of the Blackberry business cost it $7.3 million in quarter, bringing the total to more than $50 million.

In the first quarter the company's net income fell to $10.5 million, or 6 cents per share, from $43.2 million, or 20 cents per share, a year earlier.

The consumer business, which included Blackberry work, contributed 7 percent to the total revenue, down from 23 percent, a year earlier.

Forty percent of revenue came from its communications unit, which sells networking equipment, up from 33 percent last year.

Celestica gave no more details of a new contract from a top customer for its communication business, which it said in January would help it deliver a strong second half.

For the second quarter, the company expects to earn between 13 cents and 19 cents on an adjusted basis. Analysts on average expect the company to earn 17 cents, according to Thomson Reuters I/B/E/S.

Celestica expects revenue of between $1.38 to $1.48 billion in the second quarter, compared with a revenue of $1.74 billion, a year earlier.

The company has previously warned that in the second quarter it will lose a server customer which accounted for about $50 million in quarterly revenue.

(Reporting by Krithika Krishnamurthy in Bangalore; Editing by Sreejiraj Eluvangal and Rodney Joyce)