January 23, 2013 / 12:05 AM / 5 years ago

UPDATE 2-Celestica expects strong second half for communication segment

By Krithika Krishnamurthy

Jan 22 (Reuters) - Contract electronics manufacturer Celestica Inc was optimistic about the second half of 2013, despite forecasting first-quarter profit largely below analysts’ expectations.

The Toronto-based company said on Tuesday that it was upbeat about its communication business, which brought in about 35 percent of the company’s revenue last year.

“Our communication end market is expected ... to improve in the second half, in part due to a new win with one of our top customers who has made the decision to consolidate their supply base,” Chief Executive Craig Muhlhauser said in a call with analysts.

Celestica forecast adjusted profit of between 11 and 17 cents per share on revenue of between $1.325 billion and $1.425 billion for the three months ending March, which would be the first quarter after it stopped making products for Research in Motion .

The company, which makes servers and other products for branded manufacturers such as IBM and Cisco Systems Inc , recorded revenue of $1.69 billion in the first quarter of 2012, 19 percent of which came from the BlackBerry maker.

Analysts on average were expecting an adjusted profit of 16 cents per share on revenue of $1.43 billion for the quarter ending March, according to Thomson Reuters I/B/E/S.

The company also said it now expects restructuring charges related to RIM’s exit to be between $55 million and $65 million, up from its prior estimate of between $40 million and $50 million.

Celestica said it completed its manufacturing services for RIM - once its biggest customer - and related transition activities by the end of 2012.

It had said last June that it would stop making products for RIM.

The company also said on Tuesday that it would lose a server customers, who accounted for about $50 million in quarterly revenue, in the second quarter.


Celestica reported a net income of $7.2 million, or 4 cents per share, for the fourth quarter, down from $69.2 million, or 32 cents per share, a year earlier.

The company, which competes with Plexus Corp and Benchmark Electronics, earned $50.3 million or 25 cents per share, excluding items.

Revenue fell 15 percent to $1.50 billion, consistent with the company’s forecast of between $1.43 billion and $1.53 billion. Revenue from RIM, which contributed 19 percent of the company’s 2011 revenue, was minimal.

Analysts expected the company to earn 19 cents per share on revenue of $1.48 billion.

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