Lucent Technologies Inc. announced Monday that it has spun off Agere Systems, a unit that sold microelectronics and other communications components to Lucent’s telecom competitors such as Nortel Networks Corp. as well as computer equipment manufacturers.
Lucent, based in Murray Hill, N.J., first announced it would spin off its microelectronics business in July 2000, expecting to complete the transaction by the summer of 2001.
Agere’s initial public offering in March 2001 raised $3.4 billion.
But the spin-off was delayed as beleaguered telecommunications equipment maker Lucent labored to meet several financial requirements, including a minimum EBITDA (earnings before interest, taxes, depreciation and amortization) covenant required by the banks in order to complete the transaction. Lucent met the conditions in the quarter ending March 31.
Agere Systems, based in Allentown, Pa., makes integrated circuits, optoelectronic components, and subsystems for advanced wired, wireless and optical communications networks. The company employs 11,500 workers primarily based in North America, Europe and the Asia-Pacific region.
Agere has sold its components to Lucent and its competitors, resulting in a “strategic conflict,” said Frank Briamonte, a Lucent spokesman. Such companies were cautious about dealing with Agere, he said.
Agere’s top 10 customers in fiscal 2001 included Apple Computer Inc., Alcatel, Avaya Inc., Cisco Systems Inc., Globespan Inc., Lucent, Maxtor Corp., Nortel Networks, Seagate Technology Inc. and Tycom Inc., according to a 10-Q filing with the Securities and Exchange Commission. Lucent comprised 15 percent of Agere’s 2001 revenue.
“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, president and CEO of Agere, in a statement released Monday.
On June 1, Lucent distributed 37 million shares of Agere Class A common stock and 908.1 million shares of Agere Class B common stock to individuals and organizations that held Lucent common stock as of May 3.
Henry Schacht and Frank D’Amelio, the respective chairman and chief financial officer of Lucent, have resigned from Agere’s board of directors. Five board members remain: Dickson; H.A. Wagner, non-executive chairman of the board and former president and CEO of Air Products and Chemicals; Rajiv Gupta, chairman and CEO of Rohm and Haas Co.; Rae F. Sedel, managing director of Russell Reynolds Associates; and John Young, former president and CEO of Hewlett-Packard.
