The Nortel Effect: Who Wins, Who Loses

"Flextronics has been working to reduce its exposure to Nortel for some time now," said Mike McNamara, the Flextronics CEO, in a statement Wednesday. "We believe that Flextronics' strategy of customer and market diversification will continue to allow us to be in a position to weather the economic volatility."

Flextronics' stock, however, slipped 22 cents, or 7.33%, to $2.78 Wednesday following news of Nortel's Chapter 11. Thursday the price was down 2.1% to $2.75.

Analyst firm Citigroup Global Markets estimates that Nortel accounts for around 4% of Flextronics' revenues, but does not foresee a massive long-term impact on the services specialist.

"Given the relatively small revenue exposure to Nortel, we do not anticipate today's announcement having a material impact on consensus estimates for Flextronics," wrote Citigroup analyst Jim Suva, in a note released Wednesday.

Other electronics manufacturing firms with a Nortel relationship include Jabil Circuit(JBL Quote), Sanmina-SCI(SANM Quote) and Smart Modular(SMOD Quote), which all derive less than 5% of their revenues from the equipment maker.

"We expect modest inventory and accounts receivable write downs across the supply chain related directly to Nortel," wrote Suva, explaining that Nortel intends to continue its operations. "In our view this means that Nortel's supply chain partners are likely to recover most, if not all, of their working capital exposures over time."

Suva also pointed to automotive manufacturing firm Delphi's Chapter 11 as an example of how partners can withstand the challenges of bankruptcy protection. "Supply chain companies took accounts receivable and inventory write-downs up front and then later reversed the charges over time," he explained.