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Lucent Technologies Completes Delayed Spinoff of Agere

Linda A. Johnson
Agere Systems Lucent Technologies

As the final step in the spinoff, which was repeatedly delayed because of Murray Hill-based Lucent's lingering financial woes, nearly 5 million Lucent shareholders received about 945 million shares of Agere common stock. The stock was distributed Saturday, the companies said Monday.

Agere, headquartered in Allentown, Pa., makes semiconductors and the integrated circuits, optoelectronic components and subsystems that are part of advanced wired, wireless and optical communications networks.

"As a completely independent company, we will sharpen our focus on our target markets and forge deeper, more strategic relationships with our customers," said John Dickson, Agere's president and chief executive.

Previously known as Lucent's Microelectronics Group, Agere has about 11,500 employees, mostly in North America, Europe and the Asia-Pacific region. Its major customers include Lucent, Apple Computer , Cisco Systems and 3Com

Under the spinoff's terms, Lucent board chairman Henry Schacht and Lucent's chief financial officer, Frank D'Amelio, resigned from Agere's board of directors. Five people remain on the board, including Dickson and board chairman H.A. Wagner, the former president and chief executive of Air Products and Chemicals.

Altogether, 37 million shares of Agere Class A common stock and 908.1 million shares of Agere Class B common stock were distributed Saturday to people and organizations that held Lucent stock as of May 3.

Another 690 million Agere Class A shares are outstanding, most of them sold for $6 each in a March 2001, initial public offering that raised about $3.6 billion.

Lucent executives decided to spin off Agere because of a conflict of interest: The Agere unit was competing for customers with the rest of Lucent, which makes equipment and software for data, voice, optical and mobile communications networks.

The Agere spinoff is the second by Lucent, which was itself spun off in 1996 from AT&T.

On Sept. 30, 2000, Lucent spun off its Enterprise Networks Group as Avaya The Basking Ridge-based company is the country's top seller of office phone systems and a world leader in messaging and call centers, voice communications systems and cable equipment that links telephones and computers inside companies.

Agere's spinoff had been delayed by Lucent's creditors until it turned a quarterly profit before taxes, interest and certain other expenses. That happened in this year's January-March quarter.

Lucent is slowly recovering from a severe industry downturn partly caused by the national recession and from internal problems. Those included too-rapid growth, misjudging trends in the telecommunications gear market and financing many purchases of its equipment by Internet startups that went bust.

In early afternoon trading Monday on the New York Stock Exchange, Agere Class B shares were off 1 cent at $3.10. Lucent shares were up 13 cents, or more than 3 percent, at $3.92; that was after the share price was adjusted down 86 cents from its Friday close to reflect the value of the spinoff.

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