Nortel Networks to Delay Transfer of Plant to Flextronics to the First Quarter of 2005

Nortel said the change in schedule is not expected to have a material effect on its year-end cash balance or the previously announced timeline for anticipated cost savings from related internal efficiencies.

However, separately Flextronics said it will reduce revenue expectations in the December and March quarters as a result of the delay, and that the postponement may hurt earnings by 1 cent to 2 cents a share in each quarter as a result of invested costs that will not be offset by the expected volume.

Analysts surveyed by Thomson First Call currently expect Flextronics, which provides electronics manufacturing services to original equipment manufacturers, to post third-quarter earnings of 22 cents a share and fourth-quarter earnings of 17 cents a share.

The transfer of the optical design operations and related assets in Ottawa, Canada, and Monkstown, Northern Ireland, is expected to close in the fourth quarter.

The balance of the divesture is anticipated to close in the first half of 2005.

The transaction is expected, upon completion, to generate about $2.5 billion of revenue for Flextronics from Nortel Networks.

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