Celestica expects revenue to improve in current quarter

Tue Apr 23, 2013 1:52pm EDT
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(Reuters) - Canadian contract electronics manufacturer Celestica Inc (CLS.TO: Quote) (CLS.N: Quote) forecast stronger revenue for the current quarter as new contracts help to make up for the loss of former No.1 customer BlackBerry (BB.TO: Quote) (BBRY.O: Quote).

Shares of Celestica, which reported a 76 percent fall in first-quarter profit on Tuesday, were up 6 percent at C$8.27 in early afternoon trading on the Toronto Stock Exchange.

"...We expect both revenue and margins to improve in the second half," Chief Executive Craig Muhlhauser told Reuters.

"From what I've seen in the first quarter, the biggest year-on-year negative variance due to weak demand is primarily in the server business."

Celestica said on Tuesday it expects revenue to rise to $1.38-$1.48 billion in the current quarter from $1.37 billion in the first quarter. Analysts on average expect revenue of $1.43 billion. The company had revenue of $1.74 billion in the second quarter of 2012.

The Toronto-based company, which also makes servers and other products for customers such as IBM (IBM.N: Quote) and Cisco Systems Inc (CSCO.O: Quote), said in June that it would stop making products for BlackBerry, as the smartphone maker continued to slash costs.

BlackBerry, formerly Research In Motion, contributed 19 percent of Celestica's first-quarter revenue last year.

The latest quarterly results, the first without revenue from BlackBerry, were largely in line with estimates, with a slight miss on sales and a modest beat on earnings.

"I think the results will be viewed in a positive light. Having in-line results and in-line guidance in this (weak-demand) environment was the best case scenario," said analyst Gabriel Lueng of Paradigm Capital Inc.   Continued...

Celestica employees work at a production line in a factory in Dongguan, China's southern Guangdong province, July 29, 2009. REUTERS/Tyrone Siu