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    Monday, June 18, 2012

    Reuter site - Celestica to stop making products for RIM

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    Celestica to stop making products for RIM

    Mon, Jun 18 13:46 PM EDT

    TORONTO (Reuters) - Contract electronics maker Celestica Inc will stop making products for its biggest customer, Research In Motion Ltd, by the end of the year as the BlackBerry maker seeks to cut costs by shrinking its global supply base.

    Toronto-based Celestica has mainly built BlackBerry Bold and Curve models in Mexico for the North American market. RIM's sales in the United States have been hit particularly hard as it struggles to compete with Apple Inc's iPhone and devices using Google Inc's Android software.

    RIM's decision to trim the number of companies that build its smartphones illustrates the falling fortunes of the once-dominant smartphone maker as it looks to cut $1 billion from its operating costs this year. Major layoffs are planned.

    Celestica will likely take a near-term hit due to RIM's move but it is expected to bounce back as it diversifies into higher-value and higher-margin markets.

    "On some level this is a positive for Celestica," said CIBC World Markets analyst Todd Coupland. "RIM has been losing market share and they've been facing the brunt of that, both in terms of their business and their valuation," he said.

    RIM's three main remaining suppliers are Flextronics International Ltd, Jabil Circuit Inc, and Quanta Computer Inc, which makes RIM's poor-selling PlayBook tablet.

    Coupland said that, excluding cash, Celestica trades at half the multiple of Jabil. He expects either Flextronics or Jabil, which both have operations in Mexico, to win the contract to build RIM products for North America.

    RIM accounted for 19 percent of Celestica's first-quarter revenue, but that was down from a year earlier due to weak demand and program transitions at the smartphone company.

    Waterloo, Ontario-based RIM declined to comment on Monday on specific supplier relationships but pointed to its fourth-quarter earnings call in late March, when it said it would make changes to its supply chain in a bid to lower costs.

    Celestica had also seen the writing on the wall, telling investors in April that the volume of business and the locations at which it manufactures products for RIM would likely change.

    Struggling RIM has hired bankers from J.P. Morgan and RBC Capital to help evaluate its strategic optionsž.

    Celestica, which also produces servers and other products for branded manufacturers such as IBM Corp and Cisco Systems Inc, said it expects restructuring charges of up to $35 million. It did not provide a timetable for taking the charges but said it will wind down the operations over the next three to six months.

    The company said it continues to expect an adjusted second-quarter profit of 20 cents to 26 cents a share on revenue of $1.65 billion to $1.75 billion.

    Shares of Celestica, which has a market value of C$1.47 billion, slipped 0.5 percent to $7.43 on Nasdaq on Monday morning. They are down 17 percent this year.

    RIM's Nasdaq-listed shares fell 1.7 percent to $10.70. They are down 70 percent this year.

    (Reporting by Alastair Sharp in Toronto and Bhaswati Mukhopadhyay in Bangalore; Editing by Roshni Menon; and Peter Galloway)

    Reuter site - Italian notebook maker Moleskine plans Milan float

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    Italian notebook maker Moleskine plans Milan float

    Mon, Jun 18 09:53 AM EDT

    By Kylie MacLellan

    LONDON (Reuters) - Italian notebook maker Moleskine plans to list in Milan this year and has hired investment banks to run the sale of stock in the company, whose thread-bound jotters are based on originals favored by the likes of Vincent Van Gogh and Ernest Hemingway.

    Goldman Sachs, Mediobanca and UBS will run the offering for majority-owner Syntegra Capital, aiming to add to the list of upmarket brands which have lured investors in defiance of generally tough stock market conditions.

    Private equity firm Syntegra plans to file listing documents for Moleskine, in which it owns a 68 percent stake, in early September and is aiming for a market debut in the fourth quarter, said Marco Ariello, a partner at Syntegra.

    "An IPO is the right thing for the future of the company," Ariello told Reuters on Monday.

    While a string of flotations worldwide have been blown off course by choppy markets, with German chemical company Evonik the latest casualty, high-end brands have fared better with investor demand boosted by the industry performing well despite global economic uncertainty.

    In April, Italian cashmere house Brunello Cucinelli and high-end luggage maker Tumi Holdings both saw their stock surge on their debuts in Milan and New York respectively, while shares in luxury brand Michael Kors Holdings are more than a third above their December 15 trading debut price.

    PREMIUM BRAND

    "We need the market conditions to be better, but Moleskine is a premium brand in (terms of) pricing power and positioning. Valuations and market appetite for premium brands is stronger than for average brands even at difficult times," said Ariello.

    But getting the valuation right will still be a balance. Luxury London jeweler Graff Diamonds was forced to pull its $1 billion Hong Kong offering last month as analysts and fund managers questioned its valuation.

    Moleskine, a company which was created in 1997 to revive the style of notebook favored by artists and writers in the 19th and 20th Centuries, has seen growth of around 25 percent a year since Syntegra bought a 75 percent stake for around 60 million euros ($75.8 million) in 2006.

    The company takes its name from a nickname given to the notebooks by writer Bruce Chatwin, another customer of the originals made by Paris bookbinders. They are actually bound in oil-cloth covered cardboard.

    In early 2011, when venture capital firm Index Ventures bought a 15 percent stake, the company said its turnover had grown from 80 million euros in 2006 to more than 200 million in 2010.

    The offering is likely to be made up mostly of existing shares, Ariello said. He declined to comment on potential valuations for the company, or how big a stake would be sold, but said Syntegra intended to retain some of its holding following the listing to benefit from its expected future value.

    The rest of the company's shares are owned by founder Francesco Franceschi and company management.

    Moleskine, whose products also include journals, diaries and city guides, has grown from 15 employees in 2006 to well over 100 and has offices in Milan, New York and Hong Kong.

    (Editing by David Holmes)

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