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Solectron gains after snagging Nortel assets

Solectron shares scampered up 4 1/16, or 10 percent, to 43 5/16 Tuesday after announcing it will buy portions of Nortel Networks for around $900 million. It also said the two companies have inked a four-year, $10 billion supply agreement.

Nortel Networks (NYSE: NT) shares fell 10 to 109 3/4.

Solectron (NYSE: SLR) officials said it will buy certain North American and Asian assets from the network-equipment manufacturer.

It will buy Nortel's new product introduction prototyping, printed circuit board and telephone set assembly assets.

Company officials said it will provide NPI prototyping, manufacturing and repair services for Nortel's optical, carrier, enterprise and wireless products.

Solectron also said it will offer employment to all of the 4,200 workers at the acquired sites. It expects the North American part of the deal to close by the end of the second quarter, while the Asian part is expected to close in the third quarter.

In its latest quarter, Solectron earned $117 million, or 38 cents a share, on sales of $2.9 billion.

First Call consensus expects it to pocket 22 cents a share in its third quarter and 85 cents a share in the fiscal year.

Solectron shares split 2-for-1 in March.

After falling to a low of 22 9/16 last April, the stock surged to a post-split high of 49 in December.

Solectron officials said it is also discussing buying some of Nortel's assets in Europe and expects those deals to close by the end of the second quarter or in the beginning of the third quarter.

Twenty-three of the 24 analysts following the stock maintain either a "buy" or "strong buy" recommendation.