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RIM Manufacturing Partner Pulls Plug on BlackBerry

By - Source: Celestica | B 17 comments

Sign of the times? Contract manufacturer Celestica will no longer manufacturer products for RIM.

Contract electronics manufacturer Celestica Inc said on Monday that it will stop making products for struggling mobile device vendor Research and Motion (RIM) over the next three to six months.

RIM is Celestica's biggest customer, but the BlackBerry maker accounted for only 19-percent of the first-quarter revenue, down 16-percent from a year earlier. The drop is reportedly due to a weak demand for BlackBerry products.

"Celestica has been a high-performing manufacturing supplier for RIM and will work closely with RIM throughout the transition," Celestica said in a press release. "As discussed on the company’s first quarter results conference call on April 24, Celestica has been working with RIM as it assesses its supply chain strategy. Celestica estimates that prior to any recoveries, its restructuring charges will not exceed $35 million."

Previously Celestica handled RIM's higher-end products including the Bold 9900 and the Curve 8520. It also provided some after-market services from its operations in Mexico, Romania and Malaysia. However the company warned back in April that the volume of business and product manufacturing locations for RIM would likely change.

Two weeks ago, RIM officially discontinued  the 16 GB version of its poorly selling PlayBook tablet. The company will phase out the PlayBook once current stock at retailers is finally depleted. RIM said it will continue to manufacture the 32 GB and 64 GB models.

Back in March, RIM announced its 4Q fiscal 2012 results, reporting revenue of $4.2 billion, down 19-percent from the third quarter. BlackBerry shipments were 11.1 million units, down 21-percent in the same quarter. GAAP net loss in Q4 was $125 million or $0.24 per share diluted; adjusted net income of $418 million or $0.80 per share diluted.

Over the past two years, RIM's share of the U.S. smartphone market has taken a serious plunge, falling from 44-percent to a mere 12-percent. Overall RIM has lost nearly 75-percent of its market value since last June. Recently RIM told investors that it may face an operating loss for the current quarter. It even hired on bankers from JPMorgan Securities and RBC Capital Markets to help with a financial "transformation."

In addition to Celestica, RIM has additional suppliers Flextronics International Ltd and Jabil Circuit Inc. But with RIM out of the picture, Celestica said it will continue to manufacture servers and other products for branded manufacturers such as IBM Corp and Cisco Systems Inc. As previously stated, the company expects restructuring charges of up to $35 million prior to recoveries.

"Celestica is reaffirming its second quarter financial guidance that was provided on April 24. The company anticipates revenue to be in the range of $1.65 billion to $1.75 billion, and adjusted net earnings per share to be in the range of $0.20 to $0.26," the company said on Monday.

More details about Monday's RIM-related announcement will be provided as part of the company’s second-quarter results press release and conference call, which are scheduled for Friday, July 27, Celestica added.

Display 17 Comments.
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  • 8 Hide
    Anonymous , June 19, 2012 1:45 AM
    come on its "research in motion", not "research and motion".
    does anybody check these articles, at all? there's been a lot of stuff like this in your articles recently.
  • 1 Hide
    TheBigTroll , June 19, 2012 1:46 AM
    sad to see RIM die off. at least the playbook had great build quality and functionality
  • 2 Hide
    K2N hater , June 19, 2012 2:08 AM
    It leaves the feeling competitors are sending employees to post negative response with the purpose of manipulating the actual consumer. And... it's working.
  • -2 Hide
    darkavenger123 , June 19, 2012 2:19 AM
    I already said RIMs will die since the year before. But nobody listens.
  • 4 Hide
    spectrewind , June 19, 2012 2:38 AM
    engineer ncome on its "research in motion", not "research and motion".does anybody check these articles, at all? there's been a lot of stuff like this in your articles recently.


    Nope...
    Kevin has been like this a long time. It's one thing to mess up a small piece of grammar or spelling that is insignificant to the article.... but... to simply not know the name of the company you are writing about?

    And we just complain about it, those without ad blockers driving their ad revenue. Which is what it's really about. ;) 
  • 0 Hide
    A Bad Day , June 19, 2012 3:04 AM
    Well, what goes up, must come down.
  • 0 Hide
    phipps_2000 , June 19, 2012 4:07 AM
    Just wondering...who's going to buyout RIM...or the patents? Now that would be an interesting competition...m$ vs. google vs. apple vs. samsung vs htc!!
  • -1 Hide
    Anonymous , June 19, 2012 7:31 AM
    How to save RIM:
    1) Switch OS to Android.
    2) Port exclusive RIM business app onto BB Android phone
    3) Profit
  • -3 Hide
    icemunk , June 19, 2012 10:27 AM
    rotsaeHow to save RIM:1) Switch OS to Android. 2) Port exclusive RIM business app onto BB Android phone3) Profit


    Yup.. and release a new phone! They haven't had a release in a year!
  • 0 Hide
    Anonymous , June 19, 2012 11:23 AM
    HP should buy them....
  • 1 Hide
    Anonymous , June 19, 2012 2:21 PM
    Celestica didn't pull the plug. RIM is shrinking their manufacturing base because they're going to have 2 models of phone this fall. Full touch, and keyboard/touch.

    It's already been shown that the new OS (BB10, QNX) can run both Android and iOS apps fluidly. If they can gain a competitive advantage with the new devices you won't need your iToy or your Malwaredroid, you can just virtualize their apps!
  • -1 Hide
    jacobdrj , June 19, 2012 2:52 PM
    Since when was the 8520/8530 CURVE ever a 'high end' product? It was obsolete when it was released. It was nice to have an 'entry level' smartphone, and I sure miss its universal inbox and keyboard, but it was slow to run, buggy, had no support for patches and upgrades, and took 10 minutes (or more) to power up after a power down/battery replacement...
  • 1 Hide
    Osmin , June 19, 2012 3:01 PM
    It's already been shown that the new OS (BB10, QNX) can run both Android and iOS apps fluidly. If they can gain a competitive advantage with the new devices
    you won't need your iToy or your Malwaredroid, you can just virtualize their apps!
    ..

    You really believe Apple will allow iOS apps and iOS itself to run on other cell phones? They will protect their intellectual property with multiple law suits and ban the product from entering the retail market.
  • 1 Hide
    jacobdrj , June 19, 2012 3:19 PM
    OsminIt's already been shown that the new OS (BB10, QNX) can run both Android and iOS apps fluidly. If they can gain a competitive advantage with the new devices you won't need your iToy or your Malwaredroid, you can just virtualize their apps!..You really believe Apple will allow iOS apps and iOS itself to run on other cell phones? They will protect their intellectual property with multiple law suits and ban the product from entering the retail market.



    The fact that a product 'can' do something doesn't mean that it 'will' out of the box. So long as this is not an out of the box exploit, like the WebOS based Palm Pre used to do with iTunes, they should be fine...
  • 1 Hide
    eddieroolz , June 19, 2012 4:46 PM
    darkavenger123I already said RIMs will die since the year before. But nobody listens.


    They are still alive, last I checked. Plus, people on the internets have been saying a bunch of companies will eventually die. Has any of them come true yet?
  • 1 Hide
    eddieroolz , June 19, 2012 4:48 PM
    rotsaeHow to save RIM:1) Switch OS to Android. 2) Port exclusive RIM business app onto BB Android phone3) Profit


    Interestingly, outside of Engadget, Dailytech, Tom's and a few other tech enthusiast websites, no one really cares about Android to the point many people think its an iPhone.

    Going with Android would be the most disasterous decision ever.
  • 1 Hide
    bill gates is your daddy , June 19, 2012 6:46 PM
    eddieroolzInterestingly, outside of Engadget, Dailytech, Tom's and a few other tech enthusiast websites, no one really cares about Android to the point many people think its an iPhone.Going with Android would be the most disasterous decision ever.


    Interestingly, Android holds a 50+% market share. I guess that means nothing to an itard.
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