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June 18, 2012

Celestica No Longer Manufacturing Products for RIM

By Oliver VanDervoort, Contributing Writer

Despite the announcement of the BlackBerry 10 operation system, Canadian-based RIM is still seeing some big problems on the horizon. 



The company has been doing all that it can to streamline its practices in what seems to be unsuccessful attempts to pull out of its freefall. Celestica (News - Alert) Inc., however, has now announced it will stop manufacturing products for RIM over the next three to six months.

This particular announcement seems to be for the most part in reaction to RIM cutting down its global supply distribution. Of course, the announcement could also be in reaction to the fact that RIM accounted for just 19 percent of Celestica’s revenue – a dip of 16 percent from the year before. This revenue lull is clearly a product of the lack of demand for BlackBerry (News - Alert) products over the last few years, a demand that may or not may not increase once the Blackberry 10 devices hit the market. 

For its part, RIM doesn’t appear to foresee much improvement in its sales in the near future. At the end of May, the company announced plans to lay off as many as 2,000 employees this month.

The story of Celestica seems to be one of a company that has been taken down by RIM. The company has other clients, including IBM Corp. and Cisco Systems (News - Alert) Inc., but they don’t do nearly the business with them that they did with RIM. 

Celestica saysthat it will need to restructure its operations – a process that could cost the firm more than $35 million before it becomes profitable again. 

Celestica hinted it might make a move like this in April, when it announced that they might change the way it handles its production of RIM products. The fact that they have now decided to end production altogether seems to hint that they don’t have high hopes for the BlackBerry’s maker.




Edited by Braden Becker
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