Too efficient?
Celestica cuts outlook, shares drop
Tue Dec 12, 2:37 PM
MONTREAL (Reuters) - Celestica Inc. slashed its outlook for
fourth-quarter profit on Tuesday, blaming dwindling demand from large
customers and
<<<<<<<too much inventory at a Mexico
plant.>>>>>>
Celestica, which designs, manufactures and repairs parts for customers
such as IBM and Cisco, said it expects revenue of $2.20 billion to $2.25
billion, and adjusted net earnings of between nil to 6 cents a share in
the quarter ending December 31.
The revision comes less than two months after the company's previous
outlook for the fourth quarter, which saw revenue of $2.25 billion to
$2.45 billion and adjusted net earnings of 15 to 23 cents a share.
Celestica's shares were off C$1.18, or 11 percent, at C$9.58 in
afternoon trading on the Toronto Stock Exchange.
Analysts had expected fourth-quarter earnings of 19 cents a share,
according to Reuters Estimates.
Shawn Harrison, analyst at Longbow Research, said Celestica had trimmed
an already disappointing fourth-quarter forecast.
"With today's reduced sales guidance, it is painfully apparent that
further progress is necessary in management's revenue diversification
efforts," he wrote in a note on Tuesday.
Bruce Krugel, analyst at Blackmont Capital, lowered his price target for
Celestica shares to C$13 from C$16.50, but maintained a "buy"
recommendation on the stock on expectations the company will
<<<<< resolve problems at its Mexico
facility.>>>>>>
Celestica said its revenue outlook was affected by reduced demand from
several customers.
It said an expected charge of between 8 and 12 cents a share was
included in its lower forecast, stemming largely from higher inventories
at its money-losing plant in Monterrey, Mexico, where the company had
ordered too many parts.
Celestica will have to validate that forecast inventory-related charge
before actually taking the write-down, it said.
In a conference call with analysts, Craig Muhlhauser, president and
chief executive, said the company had a clearer picture of lower demand
patterns in the quarter.
"It's largely end-market demand reductions across many of our large
customers in both our communications and IT segments," he said.
Muhlhauser said the lower demand was not seen in the consumer segment
and the company's fourth quarter was not materially affected by lost
business or customer disengagements.
In the near term, however, the company has several issues to tackle,
Muhlhauser said.
"We've got to fix the situation in Monterrey. We've got to fix the
issues that we've got in terms of getting our performance in Europe to
where it needs to be, and we've got to get our inventory situation back
in line with the demand of the business," he said.
Muhlhauser, who took over as chief executive on November 27 to replace
Stephen Delaney, said he will provide an update on the company's outlook
for 2007 in the first quarter.
(Additional reporting by Scott Anderson in Toronto)
($1=$1.15 Canadian)
-----Original Message-----
From: TechNet [mailto:[log in to unmask]] On Behalf Of Werner Engelmaier
Sent: Thursday, December 14, 2006 1:32 PM
To: [log in to unmask]
Subject: [TN] Celestica
Hi 'Netters,
anybody know what theproblems are that Celestics is having in their
plant in Monterrey, Mexico?
Werner
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