Nokia Sells Two Plants to SCI Systems

Nokia (NOK) is selling two European manufacturing plants to SCI Systems (SCI) for an undisclosed sum.

According to the deal, Alabama-based SCI will buy Nokia's manufacturing business in Haukipudas, Finland and in Camberley, U.K.

SCI also said it will manufacture units for Nokia's current 2G, or second generation, and future 3G wireless base-station subsystems. It will also produce narrowband transmission products for Nokia's fixed networks. SCI and Nokia will enter into global multiyear manufacturing and engineering services agreements following the acquisition, SCI said.

"Our cooperation with SCI complements our own manufacturing capabilities and is a natural step in our networked manufacturing strategy. This cooperation brings us more flexibility and further improves our competitiveness," Nokia said today. The deal with SCI, pending regulatory approvals, is expected to close before the end of the second quarter.

The cell phone sector has been hit hard by slowing sales. Nokia's chief rivals, telecom behemoths Ericsson (ERICY) and Motorola (MOT) have forecast first-quarter shortfalls amid softening cell phone sales, high inventory levels and the dampened economy. Ericsson's warning yesterday was one of the many factors that helped send the Nasdaq to a two-year low. Nevertheless, analysts have been generally more upbeat about Nokia's prospects. TheStreet.com's Carolyn Koo examines Nokia's future in a separate story.

Shares of Nokia closed at $21.45 yesterday in trading on the New York Stock Exchange , close to its 52-week low of $20.55. The shares have a 52-week high of $62.50. SCI ended yesterday at $16.01.

This shift of business to contract manufacturers isn't the first. Earlier this year, for example, Ericsson announced it was closing the door on its own cell phone production and shifting the business to Flextronics (FLEX), which was named the sole producer of handsets for the Swedish company.

>To order reprints of this article, click here: Reprints