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Jabil Circuit’s May 2002 agreement with Lucent Technologies China and its Shanghai joint-venture partners covered manufacturing assets—not Lucent Technologies as a whole. The package described at announcement included a 325,000-square-foot factory, production machinery and inventory; Jabil later reported that it bought certain Shanghai operations in fiscal 2003’s first quarter for approximately $83.9 million.
What Jabil agreed to acquire
On May 23, 2002, Lucent Technologies China and the partners in Lucent Technologies of Shanghai (LTOS) announced an agreement to sell LTOS manufacturing assets to Jabil Circuit. The contemporary Light Reading report described the package as a 325,000-square-foot Shanghai facility, production machinery and inventory. It said the venture had about 500 employees, all of whom Jabil would offer employment.
LTOS was formed in 1989 by Lucent and three Shanghai partners: Shanghai Optical Communication Corp., Shanghai Post & Telecommunication Equipment Ltd., and Shanghai Jiushi Corp. Its purpose was to produce optical transmission equipment for the regional market.
The May announcement was about LTOS’s manufacturing assets. It should not be read as a sale of Lucent Technologies or all of its Shanghai business.
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Announcement and reported purchase
| Timing | What was reported |
|---|---|
| May 23, 2002 | Lucent Technologies China and LTOS’s partners announced the asset-sale agreement. Light Reading said completion was expected that summer. |
| First quarter of fiscal 2003 | Jabil’s 2004 Form 10-K later reported that it purchased certain operations of Lucent Technologies of Shanghai during this quarter. Jabil’s fiscal year ended August 31. |
The expected summer completion date was a forecast in the 2002 announcement, not confirmation of closing. Jabil’s later filing supplies the subsequent purchase timing and describes the acquired business as “certain operations.”
Reported price and accounting details
Jabil’s 2004 Form 10-K reported approximately $83.9 million in total consideration, based on foreign-exchange rates in effect on the acquisition date. The same filing recorded $20.5 million in purchased intangible assets and $15.5 million in goodwill, using a final third-party valuation. These are figures reported in that later filing, rather than amounts specified in the May 2002 announcement.
Products and continuing work for Lucent
Light Reading’s 2002 account described LTOS’s output as optical transmission equipment. Jabil’s 2004 filing separately described a three-year supply agreement under which Jabil would manufacture optical switching and other communications infrastructure products for Lucent. The two sources use different product descriptions; they do not establish that both phrases refer to an identical product set.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Why the companies said the deal mattered
Jabil said the purchase would add complex optical assembly and design capability, expand its Asian communications manufacturing base and strengthen its relationship with Lucent. The supply agreement meant the asset transfer was paired with a continuing manufacturing relationship, rather than simply a change in ownership of factory assets.
Lucent vice president of manufacturing strategy Steve Sherman said the agreement reflected Lucent’s strategy of working more with major contract manufacturers so the company could focus its resources on communications-network needs of large service providers. He also said it supported that strategy while creating opportunities for employees and keeping a high-tech manufacturing operation in Shanghai.
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