April 23, 2009 / 11:35 AM / in 9 years

UPDATE 3-Celestica profit tops expectations, shares rise

* Q1 adj EPS 13 cents; avg forecast 9 cents

* Revenue falls to $1.5 billion from $1.8 billion

* CEO sees good potential in smartphone market

* Shares rise 10 percent (Recasts with CEO comments; in U.S. dollars unless noted)

By Wojtek Dabrowski

TORONTO, April 23 (Reuters) - Demand for consumer products such as smartphones is helping contract electronics maker Celestica Inc (CLS.TO) (CLS.N) avoid being steamrollered by the economic crisis, its CEO said on Thursday.

“In terms of potential, it’s significant,” Craig Muhlhauser told Reuters about the smartphone market. “We’ve got some new programs in the pipeline so we’re optimistic about our ability to compete and win in that market.”

Feature-rich mobile phones such as Research In Motion’s RIMM.O RIM.TO BlackBerry have maintained strong sales despite the recession and continue to benefit the wireless carriers that offer them to subscribers.

Earlier on Thursday, Celestica — which has also produced Microsoft’s (MSFT.O) Xbox 360 video-game console — delivered a lower quarterly profit, as the tough economy hurt its results.

Still, the earnings topped analyst expectations and its shares rose 57 Canadian cents, or about 10 percent, to C$6.25 on the Toronto Stock Exchange.

Revenue in the three months ended March 31 tumbled to $1.47 billion from $1.84 billion a year earlier, as Celestica’s client companies cut spending on the products it makes.

“End-market demand’s not working for us,” Muhlhauser said after the company’s annual meeting, adding: “The challenge is really enterprise and communications.”

The telecom market has long been a point of weakness for Toronto-based Celestica. The company, whose customers have included computer giants IBM (IBM.N) and Hewlett-Packard (HPQ.N), has been pursuing new consumer-electronics business to help make up for slumping demand in other areas.

While Muhlhauser said visibility into the future remains limited given the recession and its effects, he also said the economic crisis is creating acquisition opportunities.

“It’s too soon to really say what we might do, but obviously that’s on the table now,” he said without elaborating further.

Celestica said its closely watched adjusted earnings were $29.3 million, or 13 cents a share, in the three months ended March 31, down from $35.4 million, or 15 cents a share, a year earlier.

Analysts had expected earnings of 9 cents a share before one-time items, on revenue of $1.52 billion, according to Reuters Estimates.

Net earnings per share fell to 8 cents from 13 cents a year earlier, it said.

The company said the results were in line with its published forecasts.

For the second quarter, Celestica forecast revenue of $1.3 billion to $1.45 billion, and adjusted earnings of 7 cents to 13 cents per share.

$1=$1.23 Canadian Additional reporting by Andrea Hopkins; editing by Rob Wilson

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