Contract electronics manufacturer Celestica Inc said it will stop making products for Research in Motion Ltd, its largest customer, over the next three to six months as the BlackBerry maker shrinks its global supply base.
RIM accounted for 19 percent of Celestica’s first-quarter revenue, down 16 percent from a year earlier due mainly to weak demand for BlackBerry products and program transitions at the smartphone company.
Celestica is involved in the production of better-performing RIM products such as the Bold 9900 and Curve 8520 and provides some after-market services from its operations in Mexico, Romania and Malaysia.
Struggling RIM has hired bankers from J.P. Morgan and RBC Capital to help evaluate its strategic options.
Celestica said in April that the volume of business and the locations at which it manufactures products for RIM would likely change.
RIM’s other suppliers include Flextronics International Ltd and Jabil Circuit Inc.
Celestica, which also produces servers and other products for branded manufacturers such as IBM Corp and Cisco Systems Inc, said it expects restructuring charges of up to $35 million prior to recoveries.
The company said it continues to expect an adjusted second-quarter profit of 20 cents to 26 cents per share, on revenue of $1.65 billion to $1.75 billion.
Shares of Celestica, which has a market value of C$1.47 billion, closed at C$7.61 on Friday on the Toronto Stock Exchange.