"With today's announcement, we have completed our five-year plan to divest substantially all of our manufacturing activities to world-class electronics manufacturing services companies -- a supply chain strategy that has provided, and is expected to continue to provide, significant benefits to Nortel Networks," Chahram Bolouri, president of Nortel's global operations, said in a release.

Nortel (NYSE: NT) Latest News about Nortel is transferring 1,650 Canadian employees to Singapore-based Flextronics with a deal announced Tuesday to sell its factories in Canada and Brazil for about US$700 million.

But that major money-making move, completing Nortel's five-year plan to divest manufacturing, doesn't take the Brampton, Ontario-based telecom equipment company out of hot water with Canadian and U.S. regulators over past financial statements.
Nortel, which fired CEO Frank Dunn and two other executives this year after erroneous financial statements, said Tuesday it plans to provide updated assessments of previously reported financial results before the end of July.

The company also expects to announce only "limited preliminary unaudited" results for the first and second quarters of 2004 by mid-August, missing usual deadlines.

Nortel and Flextronics

Nortel had announced in January it was in talks with Flextronics to sell its factories for what was then a possible gain of $500 million. Flextronics is also expected to acquire Nortel's manufacturing operations in France and Northern Ireland.
"With today's announcement, we have completed our five-year plan to divest substantially all of our manufacturing activities to world-class electronics manufacturing services companies -- a supply chain Latest News about supply chain strategy that has provided, and is expected to continue to provide, significant benefits to Nortel Networks," Chahram Bolouri, president of Nortel's global operations, said in a release.

"We have been able to lower our cost of sales Relevant Products/Services from Mamma Classifieds -- Guaranteed Top Placement, reduce our fixed-cost infrastructure Relevant Products/Services from IBM eServer xSeries Systems, and significantly reduce inventory levels and associated carrying costs."
The moves will leave Nortel focused on research and development, fibre-optics, software and other technology used to build high-speed telecom networks.

Under Tuesday's deal, Flextronics will acquire Nortel factories in Calgary and Montreal, along with one in Campinas, Brazil.
"In Europe, Flextronics has made an offer to purchase similar operations at the Nortel Networks Monkstown (Northern Ireland) and Chateaudun (France) Systems Houses, and, as required by law, this offer will be subject to completion of appropriate information and consultation processes with the relevant employee representatives," Bolouri said.

Transfer to Flextronics
About 2,500 employees would transfer to Flextronics, if all plans go through. About 900 are in Montreal, 650 in Calgary, 100 in Ottawa and 30 in Campinas. In Europe, about 440 in Monkstown and 330 in France would transfer.

The sale will leave Nortel with 32,500 global employees, down from 95,500 in 2000.
Flextronics will also acquire Nortel Networks' global repair services, as well as certain design assets in Ottawa and Monkstown related to hardware and embedded software design, and related product verification for certain established optical products.

Both companies would also enter into a four-year supply agreement for manufacturing in which Flextronics will manage about $2.5 billion US of Nortel's annual cost of sales, and a three-year supply agreement for design services.
Flextronics, which handles manufacturing for many telecom and computer companies, is paying Nortel $475 million to $525 million US for inventory and equipment, plus $200 million for engineering and design assets.

However, Nortel could incur about $200 million US in costs related to the transition. That includes potential severance costs for employees, although Nortel spokeswoman Tina Warren said the affected workers "will have the opportunity to work for Flextronics."
Facing Accounting Investigations

Facing accounting investigations by Ontario regulators and the U.S. Securities and Exchange Commission, Nortel fired chief executive Frank Dunn, chief financial officer Douglas Beatty and controller Michael Gollogly in April and has said it will restate earnings for the last four years. The new CEO is former U.S. admiral Bill Owens.
The company has indicated that the $732-million-US profit it initially reported for last year will be cut by half, but losses reported for 2001 and 2002 will be reduced.

The firm also said it expects to be late in filing 2004 results, and noted that second-quarter figures will not come by August as required by U.S. and Canadian rules. Such reporting delays could jeopardize a credit facility Nortel has arranged with Canada's Export Development Agency.
The company has failed to meet Toronto Stock Exchange deadlines for financial reporting, though the exchange hasn't threatened specific action, according to Nortel.

On the Toronto stock market Tuesday, Nortel shares rose 14 cents to $6.48 Cdn. The stock reached an all-time high of $124.50 in July 2000, during the high-tech boom.
Nortel's Deal with Flextronics

Jobs: Nortel is transferring 1,650 Canadian employees to Singapore-based Flextronics.
Deal: Part of Nortel's five-year plan to divest manufacturing. Nortel is selling factories in Canada and Brazil for about $700 million US.

Other: Flextronics is also expected to acquire Nortel's manufacturing plants in France and Northern Ireland.
Workforce: About 2,500 Nortel employees will move to Flextronics, including 900 in Montreal, 650 in Calgary, 100 in Ottawa and 30 in Campinas. In Europe, about 440 in Monkstown and 330 in France would transfer.

Financials: Nortel plans to release some financial results before the end of July.
Overall: The sale will leave Nortel with 32,500 global employees, down from 95,500 in 2000.

You can view the original article here...
http://www.technewsworld.com/story/34859.html