Shares of contract electronics manufacturer Celestica took their biggest dive in more than a year Friday as the firm released a financial outlook that disappointed analysts.
Celestica stock lost more than a tenth of its value — down $1.71 to close at $11.41.
Celestica three-month trading
The tumble followed the release of financial results late Thursday that showed the company's third-quarter loss widened to $42.1 million US. That was more than double the $19.6-million loss it reported a year earlier.
Excluding restructuring costs, Celestica reported adjusted net earnings of $40.5 million (18 cents a share), which bettered the analysts' consensus by two cents.
But what bothered investors was its forecast for fourth quarter adjusted earnings of 15 to 23 cents a share. The 23 analysts surveyed by Thomson Financial were expecting, on average, adjusted Q4 profit of 22 cents a share. The estimates ranged up to 26 cents a share.
Celestica said Q4 revenues would also come in about $70 million below the street's expectations.
Celestica blamed a slow turnaround at its operations in Mexico and Europe.
"From a profitability standpoint, improvements in both Mexico and Europe regions have been progressing slower than anticipated,” chief executive Stephen Delaney told analysts in a conference call.
Analysts praised Delaney's candour, but several downgraded the stock or reduced price targets.
"When we asked the CEO if he was sure there would be 'some improvement' in Mexico in Q4, we did not sense a high level of confidence," said TD Securities analyst Chris Umiastowski, who cut his rating on Celestica shares from "buy" to "hold."
In early 2005, the company announced a major restructuring that included plant closings and the loss of 5,500 jobs — up to 15 per cent of its worldwide workforce.
Celestica makes electronics components for a variety of companies.
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