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BlackBerry manufacturing partner plans to 'wind down' its relationship

September 26, 2013|By Andrea Chang
  • Jabil Circuit, a Florida provider of electronics manufacturing services, said this week that it would "wind down" its relationship with BlackBerry.
Jabil Circuit, a Florida provider of electronics manufacturing services,… (David Paul Morris / Bloomberg )

Consumers have moved on from BlackBerry. T-Mobile will no longer sell the company's smartphones in its stores. And now a manufacturing partner wants out.

Jabil Circuit, a Florida provider of electronics manufacturing services, said this week that it would "wind down" its relationship with the troubled smartphone maker. BlackBerry is Jabil Circuit's second-largest customer, accounting for 12% of its business.

"We are faced with a strong possibility of disengaging with BlackBerry," Mark Mondello, Jabil Circuit's chief executive, said during a call with analysts Wednesday. "Detailed plans and discussions are underway with our customer."

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Jabil Circuit plans to take a restructuring charge related to the move, which Mondello said he was "disappointed" by.

"Taking a decision to part ways with a customer is never easy. It comes with varying degrees of tactical difficulty," he said. "BlackBerry has Jabil's full support during this transition. We will do whatever we can to help our customer and meet their needs, all while protecting the interest of our shareholders."

BlackBerry's business, already waning, appeared to take an especially steep downturn recently.

"Ninety days ago, we were having a good year with BlackBerry," Mondello said. "And again I'll emphasize, BlackBerry's been a great customer," he said. "We typically don't talk about specific customers, but again, because of the impact to the company, we felt it important."

Last week BlackBerry said it planned to lay off about 4,500 employees, or about 40% of its workforce, and also said it lost nearly $1 billion in its most recent quarter.

BlackBerry was thrown a lifeline Monday when it announced that it had struck a tentative deal to be bought by a Canadian insurance company for $4.7 billion. BlackBerry signed a letter of intent with a consortium led by Fairfax Financial Holdings Ltd., which plans to take the smartphone maker private.

ALSO:

BlackBerry to fire 4,500, write down $960 million in inventory

BlackBerry signs letter of intent to be sold in $4.7-billion deal

T-Mobile will no longer carry BlackBerry smartphones in its stores

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