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Technology Stocks : Nortel Networks (NT) -- Ignore unavailable to you. Want to Upgrade?

To: Kenneth E. Phillipps who wrote (5680)	5/5/2000 8:46:00 AM
From: Kenneth E. Phillipps	Read Replies (1) \| Respond to of 14638

UPDATE 1-STM buys Nortel's semiconductor unit Updated 4:08 AM ET May 5, 2000 PARIS, May 5 (Reuters) - Franco-Italian semiconducter maker STMicroelectronics said on Friday it was buying Nortel Network's semiconductor production unit in Ottawa for $100 million and signing a six-year strategic tie with the firm. STM shares jumped on the news. At 0739 GMT, they were up 5.36 percent at 218 euros, the biggest gainer in the CAC-40 index of blue-chip shares. At the session high of 220.3 euros STM's market capitalisation was 63.6 billion euros, fourth in the index behind France Telecom, TotalFinaElf and Vivendi. Under the terms of the deal, STM will supply Canada's Nortel Networks Corp, the world's number two telecoms equipment supplier, with silicon semiconductor devices for six years. STM said the contract was valued at an estimated $2 billion over the first three years. "It's a very good operation for STM because it brings it three things," said an analyst in Paris who declined to be named. "First, assured and recurrent turnover; second, it allows it to speed up its development of technology for telecoms and above all it brings it additional semiconductor capacity and that's crucial for all semiconductor players because of strong demand," he said. Analysts said they now wanted more details about the price and potential synergies from the agreeemnt. STM also said in a statement that the companies would enter an agreement regarding technology, product maintenance and development in which the two firms would develop new semiconductor manufacturing technologies together. The two companies have had a similar agreement since 1993. The deal is in line with STM's strategy of working very closely with strategic customers, while for the networking specialist it allows it to develop a manufacturing and supply chain with external suppliers. "Today's agreement and the ongoing relationship with ST enable Nortel Networks to leverage the capabilities of a world-class external manufacturing supplier," said Nortel Networks vice-president Barbara Callaghan. "This provides us with greater ability to focus on our core business of developing quality systems and services for the high performance Internet," she said in a statement. STM said about 470 Nortel Networks employees will receive job offers from STM and that no job losses were expected from the strategic tie.