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RIM fallout: Celestica downgraded Add to ...

So much for the argument that all the bad news was already priced into Research In Motion Ltd. shares.

Expectations for Research In Motion's fiscal first-quarter results were low ever since the BlackBerry maker slashed its forecast in April. Many analysts expected a dismal quarter, coinciding with a lower forecast for full-year earnings. However, with shares down sharply in premarket activity on Friday morning, after the company released its quarterly results on Thursday evening, RIM has apparently dashed even these lowered expectations.

Analysts are busy lowering their target prices and recommendations on the stock, but this one stands out: Citigroup's Jim Suva cut his target to just $25 (U.S.) from $45, and changed his recommendation to "sell" from "hold."

What's particularly interesting about his call is that he believes RIM is going to drag down other companies with it -- in particular, Celestica Inc. , Jabil Circuit Inc. and Flextronics International .

Here's what he had to say (via the Wall Street Journal): "RIMM is a material customer for Celestica representing 21 per cent of sales, 15 per cent forJabil and >10 per cent for Flextronics. We view RIMM's material shortfall in its outlook as a direct headwind for these contract manufactures and this follows the disappointing news from Cisco who is a major customer also for these companies."

Apart from his changes to RIM, he is also downgrading his recommendation on Celestica to "sell" from "hold", and slashed his target price to $8 from $12. The changes on Jabil and Flextronics are more subtle, with only slight cuts to his target prices. In the case of Jabil, the company has been ramping up its exposure to Apple Inc.

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