Nortel looks to divest
Staff -- Purchasing, 3/18/2004 2:00:00 AM
Nortel Networks plans to divest itself of its remaining manufacturing activities, including product integration, testing, and repair operations.
The company is in discussions with Flextronics to transfer more than $500 million of manufacturing and inventory assets to the electronics manufacturing services (EMS) provider. Assets would include Nortel's Canadian facilities in Calgary and Montreal and plants in Campinas, Brazil; Monkstown, Northern Ireland and Chateaudun, France.
The successful completion of these discussions could result in Flextronics undertaking and managing in excess of $2 billion of Nortel Networks annual cost of sales. Under the proposed deal, Nortel Networks would receive from Flextronics $500 million in cash over a nine-month period.
Nortel Networks has divested most of its manufacturing to EMS suppliers over the last five years. The strategy has helped the company tap into best-in-class manufacturing technologies, leverage tens of thousands of resources globally and adjust to meet changing market needs.
While Nortel is outsourcing manufacturing, the company intends to retain in house all strategic management and control of its supply chains.
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