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.”

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