Alcatel to Divest Facilities in Texas, North Carolina and Puerto Rico; Focuses its Future Manufacturing Efforts On New Product Introduction - Company Business and Marketing

Cambridge Telcom Report, Jan 10, 2000

Alcatel USA (NYSE:ALA) Wednesday announced that as part of a strategic initiative to better focus its resources on new product development and introduction, it has signed letters of intent to divest three of its North American manufacturing facilities. The manufacturing sites are being acquired by Solectron Corporation and Sanmina Corporation, two of the world's largest electronics manufacturing companies.

As part of the agreements, Solectron will take ownership of the Longview, Texas, and Aguadilla, Puerto Rico, facilities, while Sanmina will take control of the Clinton, N.C., facility, in the first quarter of 2000. There are currently more than 300 employees at the Clinton facility, and more than 600 employees at the Longview and Aguadilla facilities. Both Solectron and Sanmina are highly respected in the industry for their tremendous management teams and their high growth potential.

Solectron Corporation, which has received more than 210 quality and service awards from its customers, including the prestigious Malcolm Baldrige National Quality Award, is the world's largest electronics manufacturing services company offering a full range of integrated supply-chain solutions for the world's leading electronics original equipment manufacturers.

Sanmina Corporation is a leading electronics contract manufacturing services company providing a full spectrum of integrated, value-added electronic manufacturing services, including the production of printed circuit boards, custom cable and wire assemblies, enclosures and the testing and assembly of electronic sub-systems.

"This strategic initiative will allow us to better direct and leverage our internal resources, while continuing to provide Alcatel's existing businesses with world class manufacturing and test services," said Krish Prabhu, Alcatel's COO and CEO of Alcatel USA. "We expect these actions to result in cost savings and operational efficiencies that will improve our cash flow and strengthen our balance sheet," added Mr. Prabhu.

According to Pat Vogeler, Senior Vice President of Human Resources for Alcatel USA, "This `virtual' supply chain initiative and the agreements with Solectron and Sanmina will create tremendous opportunities for employees of all companies involved. The employees at these plants will continue to be an integral part of Alcatel's success, since the products they build are used in many Alcatel systems."

Alcatel USA will continue to maintain manufacturing sites in Nogales, Mexico; Plano, Texas; Raleigh, N.C; and Richardson, Texas. These facilities will focus on new product introductions and developing leading manufacturing and test operations, providing significant employment opportunities at these locations.

Alcatel builds next generation networks, delivering integrated end-to-end voice and data solutions to established and new carriers, as well as enterprises and consumers worldwide. With 120,000 employees and sales of EURO 21.3 billion ($25.0 billion), Alcatel operates in more than 130 countries. FMI: http:/www.alcatel.com.