MANHASSET, N.Y. Flextronics said during an investor meeting Thursday it has agreed to merge its subsidiary Flextronics Networks Services with Telavie A/S, a company wholly-owned by private equity firm Altor.
In addition, the Singapore-based EMS provider said it has been in discussions with other companies about selling its Semiconductor Design Business. If the transactions are successfully consummated, Flextronics would generate $550 to $600 million of cash along with a 30 percent ownership stake in the merged Network Services company.
The operations Flextronics is considering restructuring generated $840 million in sales in Flextronics' fiscal 2005 year ended March 31, when the company reported net earnings of $339.9 million, or 58 cents per share on sales of $15.9 billion.
Despite bouncing back from an unprofitable 2004 fiscal year, there's likely lingering nervousness at Flextronics, who along with other EMS providers have shaved headcount and restructured operations in recent years as the EMS industry has consolidated.
Rival EMS provider Solectron Corp. cut 3,500 employees
April 29, consolidating approximately 850,000 square feet of facilities in Europe and North America.
Along with the potential divestitures, Flextronics said it would consider further restructuring of other operations that could result in restructuring charges of around $100 million in the fiscal 2006 year.