SINGAPORE-Nortel Networks Ltd. announced it is postponing the transfer of two Canadian manufacturing plants to Flextronics, highlighting the impact of Nortel’s ongoing financial statements review on the vendor’s business.
The company is putting the transfer off from November 2004 and February 2005 to February 2005 and May 2005 respectively. The plants are in Montreal and Calgary.
The initial transfer of general operations affecting wireless, optical and enterprise operations will still take place in November this year, according to Nortel.
The deal announced last summer will generate $2.5 billion in revenue for Flextronics from Nortel. “Of course this will reduce revenue expectations in the December and March quarters, and it may reduce our earnings per share 1 to 2 cents in each of those quarters as a result of the costs we have invested that won’t be offset by the expected volume,” said Michael Marks, Flextronics chief executive officer. “On the other hand, this will also delay some of the cash payments to Nortel Networks, which should allow us more time to accumulate cash from operations to fund such payments.”
Nortel said the decision will reduce its revenue expectation for the December and March quarters.
