Research In Motion Ltd (BBRY) Exit Pushes Celestica Q1 Earnings Down

Research In Motion Ltd (BBRY) Exit Pushes Celestica Q1 Earnings Down
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Celestica Inc. (NYSE:CLS) (TSE:CLS) posted a 76 percent decline in the first quarter earnings, primarily due to the loss of its biggest client, Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) aka BlackBerry. The contract electronics manufacturer’s revenues declined 19 percent to $1.37 billion as sales to Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) were not included in the results for the first time since 2010.

Research In Motion Ltd (BBRY) Exit Pushes Celestica Q1 Earnings Down

Celestica Inc. (NYSE:CLS) (TSE:CLS)’s adjusted earnings came at 16 cents a share or $30 million, slightly ahead of the analysts’ estimate of 15 cents a share. The company was expecting adjusted earnings between 11 and 17 cents per share. However, the Toronto-based company’s net income fell to $10.05 million or 6 cents a share from $43.2 million or 20 cents a share in Q1 2012. Celestica reports its earnings in the U.S. dollar.

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Celestica Inc. (NYSE:CLS) (TSE:CLS) manufactures servers and other products for technology heavyweights like Cisco Systems, Inc. (NASDAQ:CSCO) and International Business Machines Corp. (NYSE:IBM). Celestica announced in June 2012 that it would stop manufacturing products for Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) as the Z10 maker made some crucial changes in its supply chain to reduce costs.

Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) aka BlackBerry, contributed $321.3 million or 19 percent to Celestica Inc. (NYSE:CLS) (TSE:CLS)’s first quarter revenues in 2012. Celestica incurred $7.3 million in restructuring costs during the first quarter due to the loss of Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB). So far the company has spent over $50 million in restructuring costs related to the loss of the BlackBerry maker’s business.

Celestica Inc. (NYSE:CLS) (TSE:CLS)’s consumer business, which used to manage BlackBerry work, accounted for 7 percent of the company’s total revenue compared to 23 percent in Q1 2012. The communications unit contributed to 40 percent of its total revenues, up from 33 percent in a year ago quarter.

In January, the company said that its top customer in the communication business will help boost revenues in the second half of the year. However, it didn’t reveal the name of the customer.

For the second quarter, the company expects 13-19 cents in adjusted earnings and $1.38 billion – $1.48 billion in revenues. Celestica Inc. (NYSE:CLS) (TSE:CLS) said it will lose a server customer in the second quarter which contributes to $50 million in quarterly revenues.

Celestica Inc. (NYSE:CLS) (TSE:CLS) shares were up 4.84 percent to $8.02 at 12:59 PM EDT.

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