Celestica Inc. announced plans to break ties with BlackBerry creator, Research in Motion (RIM), within the next six months.
Celestica has been trying to aid the struggling BlackBerry maker in evaluating its business strategies and will continue providing such help throughout the coming months.
"Over the course of the next three to six months, it will wind down its manufacturing services for Research in Motion (RIM)," Celestica said in a statement posted on the company's website. "Celestica has been a high-performing manufacturing supplier for RIM and will work closely with RIM throughout the transition."
Celestica has not quite detailed its further plans, but has made reference to doing so once they announce the company's second-quarter results in July.
Celestica expects that its restructuring charges will not be more than $35 million.
Robert Young, a technology analyst at Canaccord Genuity, believes the parting of the two companies is a good thing for Celestica.
"There's no way around it - 20 per cent off the top line is a big hit, but RIM is the lowest-margin of all Celestica's manufacturing," said Young.
In the past when BlackBerry products were selling rapidly, a low margin was not too much of an issue. Now that BlackBerry is suffering from a lack of sales as well as low volume, a deal with the company is no longer appealing to manufacturing companies like Celestica, Young added.
The split may prove beneficial for RIM as well, as it will help aid them with saving in the company's supply chain. This is part of their plan to stay afloat during the company's downturn.
In an emailed statement to 680news RIM stated, "As we outlined in our Q4 earnings call, we are making changes to our supply chain as part of wider efforts to improve the efficiency and cost effectiveness of RIM's operations to help meet our strategic objectives and to deliver long-term value to our stakeholders."
