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UPDATE - Celestica to slash 5,000 jobs
Thursday April 22, 6:52 pm ET
By Jeffrey Hodgson
(Adds analyst comment, stock move. In U.S. dollars unless noted)
TORONTO, April 22 (Reuters) - Contract electronics manufacturer Celestica Inc. posted an adjusted first-quarter profit and strong second-quarter guidance on Thursday, beating analysts' forecasts and pushing up its stock in after hours trade.
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But the maker of electronic parts for such companies as IBM, Sun Microsystems, Cisco and Lucent, said it would have to slash 5,000 jobs over the next year, or 10 to 15 percent of its work force, to improve its performance.
Celestica (Toronto:CLS.TO - News; NYSE:CLS - News) also appointed Stephen Delaney as its chief executive. Delaney had served as interim CEO since January following the abrupt departure of Eugene Polistuk.
Shares of the Toronto-based firm rose $1.79, or 11 percent, to $18.54 in after hours trading from their Thursday close in New York.
"The guidance was substantially higher than what we were looking for," said Todd Coupland, an analyst with CIBC World Markets, who owns Celestica shares.
"I didn't have a particular number (of job cuts) in mind, but was anticipating that because of deterioration in financial performance in the higher cost regions that Celestica was definitely going to do something there."
Celestica reported a net loss of $8.4 million, or 6 cents a share, for the quarter ended March 31, compared with a loss of $3.2 million, or 2 cents a share, in the corresponding period last year.
The latest quarter includes a pretax $11 million restructuring charge.
Adjusted earnings, excluding the amortization of intangible assets, integration costs and one-time charges, fell to $8.2 million, or 2 cents per share, from $12.8 million, or 4 cents per share, a year earlier.
Revenues in the quarter rose to $2.017 billion from $1.587 billion.
That beat analysts' expectations for an adjusted loss of 3 cents per share, on revenues of $1.87 billion, according to Reuters Research, a unit of Reuters Group Plc.
Celestica said in January it expected revenue of $1.75 billion to $1.95 billion for the first quarter and adjusted results per share ranging from a loss of 8 cents to nil.
For the second quarter, Celestica forecast revenues to be in the range of $2.15 billion to $2.35 billion and adjusted earnings per share of 7 cents to 13 cents.
Analysts had expected a second-quarter adjusted profit of 1 cent per share, on revenues of $1.973 billion, according to Reuters Research.
"This could finally represent the turn in Celestica's business that many have been waiting for," Lehman Brothers analyst Louis Miscioscia said in a note to clients.
Celestica, which competes with Solectron Corp. (NYSE:SLR - News), Jabil Circuit Inc. (NYSE:JBL - News), Flextronics International Ltd. (NasdaqNM:FLEX - News) and Sanmina-SCI Corp (NasdaqNM:SANM - News), warned it would need to take pretax charges in the range of $175 million to $200 million for the job cuts and restructuring.
"We've been putting together our turnaround plans for the company that include some of the restructuring that we're announcing today, as well some of the efforts that we have underway already," Delaney told Reuters.
"With the need to get our margins turned around in this business, we needed to compress the capacity in our higher-cost geographies so that their performance could improve and it could strengthen those regions while Asia continued to grow."
Thursday April 22, 6:52 pm ET
By Jeffrey Hodgson
(Adds analyst comment, stock move. In U.S. dollars unless noted)
TORONTO, April 22 (Reuters) - Contract electronics manufacturer Celestica Inc. posted an adjusted first-quarter profit and strong second-quarter guidance on Thursday, beating analysts' forecasts and pushing up its stock in after hours trade.
ADVERTISEMENT
But the maker of electronic parts for such companies as IBM, Sun Microsystems, Cisco and Lucent, said it would have to slash 5,000 jobs over the next year, or 10 to 15 percent of its work force, to improve its performance.
Celestica (Toronto:CLS.TO - News; NYSE:CLS - News) also appointed Stephen Delaney as its chief executive. Delaney had served as interim CEO since January following the abrupt departure of Eugene Polistuk.
Shares of the Toronto-based firm rose $1.79, or 11 percent, to $18.54 in after hours trading from their Thursday close in New York.
"The guidance was substantially higher than what we were looking for," said Todd Coupland, an analyst with CIBC World Markets, who owns Celestica shares.
"I didn't have a particular number (of job cuts) in mind, but was anticipating that because of deterioration in financial performance in the higher cost regions that Celestica was definitely going to do something there."
Celestica reported a net loss of $8.4 million, or 6 cents a share, for the quarter ended March 31, compared with a loss of $3.2 million, or 2 cents a share, in the corresponding period last year.
The latest quarter includes a pretax $11 million restructuring charge.
Adjusted earnings, excluding the amortization of intangible assets, integration costs and one-time charges, fell to $8.2 million, or 2 cents per share, from $12.8 million, or 4 cents per share, a year earlier.
Revenues in the quarter rose to $2.017 billion from $1.587 billion.
That beat analysts' expectations for an adjusted loss of 3 cents per share, on revenues of $1.87 billion, according to Reuters Research, a unit of Reuters Group Plc.
Celestica said in January it expected revenue of $1.75 billion to $1.95 billion for the first quarter and adjusted results per share ranging from a loss of 8 cents to nil.
For the second quarter, Celestica forecast revenues to be in the range of $2.15 billion to $2.35 billion and adjusted earnings per share of 7 cents to 13 cents.
Analysts had expected a second-quarter adjusted profit of 1 cent per share, on revenues of $1.973 billion, according to Reuters Research.
"This could finally represent the turn in Celestica's business that many have been waiting for," Lehman Brothers analyst Louis Miscioscia said in a note to clients.
Celestica, which competes with Solectron Corp. (NYSE:SLR - News), Jabil Circuit Inc. (NYSE:JBL - News), Flextronics International Ltd. (NasdaqNM:FLEX - News) and Sanmina-SCI Corp (NasdaqNM:SANM - News), warned it would need to take pretax charges in the range of $175 million to $200 million for the job cuts and restructuring.
"We've been putting together our turnaround plans for the company that include some of the restructuring that we're announcing today, as well some of the efforts that we have underway already," Delaney told Reuters.
"With the need to get our margins turned around in this business, we needed to compress the capacity in our higher-cost geographies so that their performance could improve and it could strengthen those regions while Asia continued to grow."
