Celestica Inc. (CLS) is betting on industries from health care to aerospace to fill the sales void left by BlackBerry, which a year ago made up 19 percent of the electronics-parts suppliers revenue. <\/p>\n
The Toronto-based components maker expects revenue to grow by modest double digits in its so-called diversified category after winding up assembly work for BlackBerry in late 2012, Celestica Chief Executive Officer Craig Muhlhauser said. <\/p>\n
Muhlhauser, 64, said he realized he had to do something about his companys dependence on BlackBerry toward the end of 2011, when the smartphone maker, then known as Research In Motion Ltd. (BB), was struggling against Apple Inc. (AAPL) and Samsung Electronics Co. <\/p>\n
The momentum was not in RIMs favor, and they seemed to be lost from a product strategy standpoint, Muhlhauser said in an interview yesterday in Toronto. As BlackBerry sales tumbled, it became a big overhang on the company -- it just overtook us, said Muhlhauser. <\/p>\n
Celestica announced in June it would stop building BlackBerrys. The diversified category, which also includes defense, industrial and semiconductor customers, accounted for 24 percent of revenue in the first-quarter earnings released yesterday, up from 19 percent a year ago. <\/p>\n
The strategic shift has just begun, and Celesticas challenge will be to rebuild sales, said Shawn Harrison, an analyst at Longbow Research in Independence, Ohio. The potential customers Celestica is eyeing in the diversified business offer opportunities because they havent traditionally turned over their manufacturing for an outsider to handle, he said. <\/p>\n
These markets are less outsourced. The challenge is many of the program wins are much smaller, Harrison said. If you won a large telecoms program in the past it could be a half- billion dollars. These could be $100 million, but many are $5, $10, $15, $25 million, Harrison said by phone. On the other hand, those smaller contracts also can be more profitable, he said. <\/p>\n
BlackBerry has been losing market share for three years as its aging lineup of smartphones with a slower Web browser and smaller range of applications led consumers to opt for rival devices like the iPhone. BlackBerry is now betting on a new operating system and refreshed phone lineup to woo back customers. <\/p>\n
Celesticas sales fell 19 percent to C$1.37 billion ($1.33 billion) in the first quarter from a year earlier, the company said yesterday. Revenue this year is expected to slide 9.7 percent, according to the average estimate of 13 analysts surveyed by Bloomberg. <\/p>\n
The company posted profit of 16 cents a share excluding stock compensation and other charges, beating the average analyst estimate of 15 cents in a Bloomberg survey. The stock rose 1.7 percent to C$8.44 at 9:59 a.m. in Toronto. They remain little changed in the past year as the Standard & Poors Information Technology Sector Index (STINFT) climbed 14 percent. <\/p>\n
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Celestica Fills BlackBerry Gap With Aerospace: Corporate Canada<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Celestica Inc. (CLS) is betting on industries from health care to aerospace to fill the sales void left by BlackBerry, which a year ago made up 19 percent of the electronics-parts suppliers revenue Continue reading