October 28, 2010 / 11:49 AM / in 8 years

UPDATE 2-Celestica misses on delays, shares slide

* Says orders pushed into current quarter, 2011

* More consumer, server business to tighter margins

* Shares close 5.4 percent lower

(Adds analyst comments, details; all amounts in U.S. dollars)

By Alastair Sharp

TORONTO, Oct 28 (Reuters) - Celestica Inc (CLS.TO)(CLS.N) said on Thursday adjusted profit rose slightly but trailed estimates on lower demand and delays, and shares of the contract electronics maker dropped as much as 10 percent.

The company, whose biggest customer is BlackBerry-maker Research In Motion RIM.TORIMM.O, said some orders for consumer devices were delayed until the current quarter.

The Toronto-based company said it expects revenue of between $1.7 billion and $1.85 billion and adjusted earnings of 20 to 26 cents a share in the current quarter. Analysts had been expecting earnings of 25 cents.

Celestica gave what analysts characterized as a robust 2011 outlook after saying it won three new consumer product deals.

“The miss was not positive but my view is they are fine for 2011,” said Todd Coupland from CIBC World Markets. “Celestica has some costs to digest as they absorb these new programs.”

Gus Papageorgiou, an analyst from Scotia Capital, said the three consumer deals were likely product updates for RIM’s BlackBerry smartphones in new countries. That would “expose Celestica to RIM’s strong international business which is growing much faster than their relatively stagnant North American business,” he said.

Celestica has factories across the world, including in China, Malaysia, Thailand, across Europe and in Mexico. IBM and Cisco (CSCO.O) are also major customers.

Another BlackBerry manufacturer, Singapore-based Flextronics International (FLEX.O) said on Wednesday that strong smartphone sales boosted its quarterly profit. It said its sales and earnings would remain robust in the current quarter. [ID:nN27255684]

For the three months to the end of September Celestica had adjusted earnings of $46.3 million, or 20 cents a share, versus $44.3 million or 19 cents a year earlier. Analysts had on average expected earnings of 22 cents a share, according to Thomson Reuters I/B/E/S.

Third-quarter revenue fell marginally to $1.55 billion, below consensus of $1.6 billion and at the low end of the company’s previous guidance.

Celestica said 2011 revenue should grow between 10 and 15 percent, a sharp increase from previous guidance of 6 to 8 percent, as it fills contracts in its server and smartphone businesses and sees strong orders in its industrial, aerospace and defense unit.

“Celestica guided up 15 percent in terms of revenue, Flex guided up 4 percent,” CIBC’s Coupland said. “There is no question these new programs are contributing and support their higher goal for 2011.”

Shares of Celestica, which was spun off from IBM (IBM.N) in 1996, fell as much as 10 percent on Thursday before paring some losses to close 5.4 percent lower at C$8.59. The shares have shed almost 14 percent this year. (Reporting by Alastair Sharp, additional reporting by Gowri Jayakumar in Bangalore; Editing by Gopakumar Warrier)

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