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Lucent Microelectronics to Split, Go Public

Lucent Technologies Inc. has decided to take its rapidly growing microelectronics and communications technology division public, anticipating an initial stock offering in first quarter of next year.

Thursday's announcement comes on the heels of its reported earnings of more than $1 billion in the fiscal year third quarter ending June 30, an increase of 30 percent, or 30 cents per share.

The new company, whose name will be determined later, will commence its corporate live with the more than $4 billion in revenues it produced the last four quarters.

Richard McGinn, Lucent chairman and chief executive officer, said the company will capitalize on its top ranking semiconductor business and free-up the rest of the firm to pursue wireless, optical and data network build-out goals.

"We are creating a vibrant new company that from its beginning will be an industry leader in two of the hottest growth markets in the semiconductor industry; optoelectronics and communications integrated circuits," McGinn said. "It will be the only stand-alone component company with the ability to marry the worlds of silicon and optical on its own.

"At the same time," McGinn said, "Lucent will now be able to completely focus on the largest network build-out in world history, a more than $225 billion global opportunity in broadband and mobile Internet infrastructure that is expected to double in five years."

The news comes as no surprise to the communications industry, which has observed Lucent shifting gears to its streamline operations.

In April, Lucent announced it would shed some of its operations, opening the door for other manufacturers to purchase its several facilities.

McGinn said it was time for Lucent to spin off its semiconductor business to respond to industry demands faster and get its products to market quicker.

"The communications infrastructure and semiconductor markets have become so big, so fast-moving and so competitive that it is time to divide in order to accelerate growth," McGinn said. "The best way to excel in these markets is through two more focused and agile companies, each with a singular mission, concentrated resources and an increased intensity. With this increased focus, both companies will be able to grow even faster."

John Dickson, Lucent's current microelectronics and communications technologies executive vice president and chief executive officer, is slated to lead the new company, which will have its own board of directors to manage operations.

The new company plans on selling 20 percent of its stock during the initial public offering in 2001, with the remaining shares spun-off for tax-free internal distribution.

Dickson said the new company is in the enviable position of starting at number one and being able to leverage that position to grow even more.

"No semiconductor company can match our end-to-end capability, or our leadership in communications segments from wired to wireless, voice to data, or copper to optical transport," Dickson said.

"The new company becomes a pure play for communications semiconductors in the industry, a market growing greater than 20 percent."