Canada-based Celestica announced plans today to “wind down” manufacturing services for Research in Motion over the next three to six months. More details will come next month during Celestica’s second-quarter conference call, but this comes as a direct result of RIM’s downturn. The two Canadian companies worked closely together in the past and Celestica is likely looking to sever ties before things get really ugly.
Celestica is a big part of RIM’s ecosystem. As the old axiom says about GM and the U.S. economy, as RIM goes so goes Celestica. There was even a time during RIM’s heyday that savvy investors could jump on the crackberry bandwagon through Celestica and it’s relatively lower stock price. But recently, as RIM crashed, Celestica’s decision to diversify into supply chain management caused its stock to hold strong. In fact, in mid 2009, the lowly manufacturer’s stock price overtook RIM’s and the two haven’t changed positions again.
Celestica will continue to work with RIM through the company’s restructuring by assessing its supply chain strategy. Celestica doesn’t expect the restructuring charges to exceed $35 million. RIM is just one of Celestica’s contracts which also builds wares for other industry giants such as IBM and Cisco.