COPPELL, Texas—CellStar Corp., a wireless handset and accessory distributor, announced it has lost a portion of its business with Lock/line L.L.C., its largest customer in North America. CellStar’s stock dropped nearly 22 percent to $2.15 per share on the news.
Lock/line merged with Asurion on the first day of 2006, and the latter company recently informed CellStar that it would take a portion of its insurance-related handset business in-house early next month.
Last year, Lock/line purchased a significant number of new handsets through CellStar to cover insurance-related handset losses, accounting for up to one-quarter of CellStar’s North American revenues and about 12 percent of CellStar’s overall revenues. After discussions with Asurion, CellStar reported that revenues from Asurion would be reduced this year by as much as 40 percent.
CellStar provides logistic support and distribution services to the wireless industry, with operations in North America and Latin America. Last year, the company announced that it would restate earnings for the years 2000 to 2003 due to accounting issues in its China operations, where employees used unauthorized tactics to boost the company’s revenues and hid their actions from auditors. CellStar later fired two managers in its Asia-Pacific business.
