Sanmina-SCI signs deal with IBM
Jan 08, 2003
Sanmina-SCI (Nasdaq: SANM) announced it has expanded its relationship with IBM, signing an agreement that calls for Sanmina-SCI to provide a range of additional manufacturing services to IBM in North America and Europe. As part of this agreement, Sanmina-SCI has signed a three-year supply agreement to provide IBM specific manufacturing services. Sanmina-SCI's revenues over the three-year term of the agreement are expected to be in excess of $3.6 billion. Further terms of the transaction, which is expected to close in the first calendar quarter of 2003, were not disclosed. Closing is subject to satisfaction of customary closing conditions, including receipt of regulatory clearances in the relevant jurisdictions.Specifically, IBM will outsource manufacturing of a significant portion of its low and midrange eServer xSeries products and IntelliStation workstations and custom configuration of some ThinkPad notebooks for customers in the Americas, Europe the Middle East and Africa to Sanmina-SCI. Sanmina-SCI will acquire the IBM manufacturing operations that support these products in Mexico and Scotland. In addition, Sanmina-SCI will distribute and fulfill customer orders for computing options for IBM. The agreement also includes the transfer of approximately 650 IBM employees in Greenock, Scotland, 400 IBM employees in Guadalajara, Mexico and 10 IBM employees in the Raleigh, North Carolina area. All transferring IBM employees will be offered positions with Sanmina-SCI.Bob Moffat, Senior Vice President and Group Executive, Integrated Supply Chain of IBM said: "We've had a long and successful relationship with Sanmina-SCI. The company has expertise, efficiency and economies of scale for industry-standard products that will give IBM a significant competitive advantage in the marketplace. This move will be seamless and transparent to our customers, and help us deliver the efficiency, flexibility, speed and responsiveness our customers expect from IBM."Commenting on the transaction, Jure Sola, Chairman and Chief Executive Officer of Sanmina-SCI, said, "We are delighted to further expand our long-term relationship with IBM. This agreement, which underscores the significant benefits outsourcing offers OEMs, is a result of Sanmina-SCI's proven track record, especially in our configure to order (CTO) and build to order (BTO) quick-turn capabilities, our commitment to superior quality, our advanced technology, and our excellent customer service. In addition to broadening our global manufacturing capabilities in key geographic regions, upon completion of this agreement, Sanmina-SCI will become a leading EMS provider in the global server manufacturing and distribution market. This market sector represents an expanded growth opportunity for us."We are also pleased to welcome IBM's experienced employees to the Sanmina-SCI family. As a result, we believe Sanmina-SCI will have one of the most talented computer-savvy employee teams in the EMS Industry. We look forward to a mutually supportive and beneficial future together," Sola commented further.Conference Call InformationSanmina-SCI will be hosting a conference call to discuss the announced manufacturing outsourcing agreement with IBM. The conference call is scheduled to take place at 12:00 p.m. EST (9:00 a.m. PST) today, January 7, 2003. The dial-in number for the call is 877-273-6760 (Domestic) and 706-634-6605 (International). Callers should dial in 10 minutes prior to commencement of the call. A telephone replay will be available for 48 hours following the conference call. The replay access number is 800-642-1687 (Domestic) and 706-645-9291 (International), access code 7480299.