Sector Snap: RIM suppliers fall on company's woes

Shares of RIM suppliers fall; analyst says investors may not grasp extent of their challenges

Associated Press

Shares of suppliers to Research In Motion Ltd. dropped on Wednesday, following the BlackBerry maker lower as investors worried about the company's fate.

Citi Investment Research analyst Jim Suva said Wednesday that investors may be underestimating the problems BlackBerry suppliers are facing. He warned that the deterioration in RIM's business is bad news for Celestica Inc., Jabil Circuit Inc. and Flextronics International Ltd, noting that about 19 percent of Celestica's sales are to RIM, while 15 percent of Jabil's sales are to RIM and 5 percent of Flextronics' sales.

Late Tuesday RIM warned of a quarterly loss and said it was hiring bankers to help it decide what to do with the company. The Canadian company said it will lay off a "significant" number of employees.

RIM's sales are sliding as BlackBerrys fall out of fashion, yielding to iPhones and Android phones.

Representatives for Celestica, Jabil and Flextronics could not be immediately reached for comment.

Celestica's stock fell 55 cents, or 7.1 percent, to $7.19 in afternoon trading, while shares of Jabil declined 71 cents, or 3.5 percent, to $19.35. Flextronics' stock shed 8 cents, or 1.2 percent, to $6.38.

Suva kept a "Sell" rating for RIM and cut its price target on its shares to $9.50 from $11.75. The company's stock slid 84 cents, or 7.5 percent, to $10.39. The shares had lost nearly 75 percent of their value over the past 12 months.

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