Solectron buys Cisco optical equipment operation

By : |May 30, 2001 0

MILPITAS: Solectron Corp., the No. 1 contract electronics manufacturer, said
on Tuesday that it had reached a deal to take over an optical equipment plant
from Internet networking giant Cisco Systems Inc.

Solectron said it would buy Cisco’s manufacturing equipment and had been
granted a two-year contract to outsource the production and testing of Cisco’s
dense wave division multiplexing (DWDM) equipment, which is used to increase the
bandwidth of optical fiber networks.

Financial terms of the deal were not disclosed. Cisco has handled its optical
operations at a plant in West Columbia, South Carolina, but Solectron said the
equipment would be moved to its existing optical center in Charlotte, North
Carolina within the next 90 days.

Solectron said that it had offered jobs to key operations and management
staff at Cisco as part of the transition. About 90 Cisco staff in South Carolina
were laid off as part of the transfer, job reductions that were counted against
the company’s announced goal of cutting between 7 and 11 per cent of its global
work force, the company said.

Milpitas, California-based Solectron manufactures equipment for brand-name
equipment manufacturers, such as Cisco. The company also operates an optical
production and networking operation in Sweden for Ericsson .

For Solectron, the deal marks the third acquisition in a month and extends
the company’s reach into optical equipment, an area it has targeted for
expansion. Last week Solectron bought a privately held, Singapore-based
manufacturer of plastic casings for computers and other electronics.

In late April, the company completed a deal to take over Centennial
Technologies as part of a bid to strengthen its production capabilities in
memory cards and flash memory used in mobile phones and other devices. Solectron
shares closed down 6 per cent to $22.92 on the Nasdaq ahead of the announcement
and were unchanged after hours on Instinet. The stock has rebounded since early
April but is still off 32 per cent since the start of the year.

(C) Reuters Limited 2001.

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