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Technology Stocks : John, Mike & Tom's Wild World of Stocks

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To: wlheatmoon who wrote (1167)	5/31/2000 9:43:00 AM
From: John Pitera	Read Replies (1) of 2850

FLEX--Contract Manufacturers..Motorola Sets $30 Billion Pact With Flextronics Wednesday May 31 8:44 AM ET NEW YORK (Reuters) - Motorola Inc. (NYSE:MOT - news), the world's No. 2 wireless phone maker, said Wednesday it signed an outsourcing pact with Flextronics International Ltd. (NasdaqNM:FLEX - news) worth more than $30 billion over a five-year period and will take a small stake in the contract manufacturer. Flextronics will supply and manufacture certain parts and units included in Motorola's wireless phone, two-way pager, wireless infrastructure products and other devices, the companies said in a joint statement. The deal is the latest in the recent trend of broad outsourcing pacts by electronics makers with smaller firms like Flextronics and Solectron Corp. (NYSE:SLR - news) Motorola said the pact, which marks one of the largest outsourcing agreements between a contract manufacturer and a name-brand electronics firm, is similar to other programs throughout its business segments to outsource manufacturing and is part of its strategy to improve supply chain efficiencies and meet increasing product demand. The companies said the estimated value of services is expected to exceed $10 billion in the fifth year. As part of the deal, Motorola will buy an equity instrument at a discount for an initial payment of $100 million. That instrument is convertible over time into 11 million shares of Flextronics stock, representing about a five percent stake. Motorola said the deal will affect about 15 percent of the total manufacturing of its Communications Enterprise division over the five year period. The deal will let Motorola better anticipate its customers needs and speed the time to market for its products globally. Both companies have agreed to develop their businesses together in several ways, including e-commerce connections to global supply of a services, while sharing some financial costs and gains. In early April customized electronics maker Solectron Corp. (SLR.N) signed a similar deal with Nortel Networks Corp (Toronto:NT.TO - news) (NYSE:NT - news) operations in North America and Europe for $900 million and supply parts and services to the equipment maker under a $10 billion contract. Shares of Motorola closed at 96-7/16 on the New York Stock Exchange on Tuesday, up 4-5/16 on the day. Shares of Flextronics closed at 50-1/16 on the Nasdaq, unchanged on the day.

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