Nortel In Talks To Sell Off Factories

TORONTO (AP) -- Nortel Networks is in talks to sell nearly all of its factories to electronics firm Flextronics of Singapore in a $500-million deal that could see the Canadian company shed 2,500 jobs.

The company said the negotiations would include manufacturing activities in Brazil, Northern Ireland, and France.

"This is the same strategy we introduced five years ago when we divested most of our manufacturing," Nortel spokeswoman Tina Warren said Thursday. "It will affect a number of employees, but we're in discussions, so it would be premature to discuss."

The company, based just outside Toronto, has gone through a massive downsizing since the global telecom industry began its steepest and deepest decline in history.

Nortel is now only about one-third of its former size, having already cut about 60,000 jobs worldwide. But even before its period of post-bubble downsizing, Nortel had divested much of its manufacturing."This proposed operating model is an evolution of one that has already been implemented successfully" in Nortel Networks in North Carolina and Massachusetts, said Chahram Bolouri, president of Nortel's global operations.

Nortel said Thursday the deal, if completed, would see the Singapore-based firm manage more than $2 billion of Nortel Networks annual sales costs. It would also see Nortel transfer more than $500 million of manufacturing and inventory assets to Flextronics.

Nortel said it anticipated receiving from Flextronics more than $500 million in cash over a nine-month period, primarily for inventory and other assets.

"At this stage, however, there can be no assurances that these discussions will lead to a binding agreement," Nortel said.