Celestica to stop manufacturing for RIM | WPN World People News

Canada-based Celestica, a global major in the delivery of end-to-end product lifecycle solutions, Monday announced plans to wind down its manufacturing services for Research in Motion (RIM) its biggest customer.

In a statement, the electronics contract manufacturer said it would be stopping production for RIM "during the next three to six months".

"Celestica has been a high-performing manufacturing supplier for RIM and will work closely with RIM throughout the transition," the company stated..

The announcement comes within weeks of RIM announcing plans to stop production of 16GB version of its BlackBerry PlayBook tablet.

Assuring that details of the winding down plans would be unveiled as part of the company's second-quarter results on July 27, Celestica reminded that during the conference call on April 24 during the announcement of the first quarter results it had made known plans of working with RIM, the troubled BlackBerry maker as it assesses its supply chain strategy.

RIM accounted for 19 per cent of Celestica's revenue during the first quarter, down 16 per cent from a year earlier, largely due to weak demand for BlackBerry products, Reuters reported.

Celestica estimates its restructuring charges will not exceed $35 million, prior to any recoveries.

The Canadian company, which has been involved with the production of RIM products such as the Bold 9900 and Curve 8520, anticipates second quarter revenue to be in the range of $1.65 billion to $1.75 billion, and adjusted net earnings per share to be in the range of $0.20 to $0.26.

RIM recently hired bankers from J.P. Morgan and RBC Capital to help evaluate its strategic options.

"As we outlined in our Q4 earnings call, we are making changes to our supply chain as part of wider efforts to improve the efficiency and cost effectiveness of RIM's operations to help meet our strategic objectives and to deliver long-term value to our stakeholders," said a RIM spokesperson, reported PCMag.

Source: North America News.Net