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Tuesday February 9, 9:15 pm Eastern Time
Celestica jumps on contract news, profits
TORONTO, Feb 9 (Reuters) - Shares in Celestica Inc. (NYSE:CLS - news), the former electronics manufacturing arm of IBM (NYSE:IBM - news)
Canada Inc., rose after it reported favorable contract results and a strong fourth quarter.
Celestica shares rallied to a daily high of C$44.30 before retreating. The stock closed up C$0.55 at C$43.
One analyst, who asked not to be identified, said company management spoke of many contract wins in their conference call with analysts after releasing fourth quarter profits late
''On the conference call they discussed that they have won eight contracts with telecom equipment companies,'' he said.
''Up to three of them could be 10 percent customers, sometime in the future,'' he added. That means a few of those client deals could grow to 10 percent of Celestica's income within the
next few years, analysts said.
''So my sense is why the stock's up is that they've been very successful in getting new contracts in that area,'' he added.
Celestica, which is one of the world's largest providers of electronic manufacturing services, posted record revenues in its last three-month period ended December 31.
Fourth quarter revenue increased to $925.3 million from $683.2 million in 1997. Adjusted net earnings rose to $18.7 million or $0.27 a share versus year-ago $12.3 million or $0.32.
Eugene Polistuk, the company's president and chief executive, said that the firm was not ruling out more acquisitions at a time when many firms seem to be shopping. ''We're always
looking - the level of activity is at an all-time high.''