Nortel Networks/Flextronics to Evolve Supply Chain

Nortel Networks will divest substantially all of its remaining manufacturing activities, including product integration, testing, and repair operations carried out at its facilities in Calgary and Montreal (Canada), Campinas (Brazil), Monkstown (Northern Ireland), and Chateaudun (France). It will also divest itself of certain related activities, including the management of the supply chain and related suppliers for these locations.


Nortel Networks is in discussions with Flextronics about the activities being considered for divestiture. The company said that a successful completion of these discussions could result in Flextronics undertaking and managing in excess of US$2 billion of Nortel Networks annual cost of sales on a go forward basis and involve the transfer from Nortel Networks to Flextronics of more than US$500 million of manufacturing and inventory assets. In return Nortel Networks anticipates receiving from Flextronics proceeds in excess of US$500 million in cash, over a nine-month period, for primarily inventory and certain manufacturing assets, as well as an additional amount for certain intangible assets. At this stage, however, Nortel Networks said there can be no assurances that these discussions will lead to a binding agreement.


A deal with Flextronics could affect up to approximately 2,500 Nortel Networks employees. http://www.nortelnetworks.com