Optical/IP Networks

Agere Delays IPO and Reduces Offering

Agere Systems, Lucent Technologies Inc.’s (NYSE: LU) optical component spinoff, revised the terms of its initial public offering today, according to its S-1 filed with the Securities and Exchange Commission.

This follows a day after the company pushed back its initial public offering to the week of March 26th, according to reports from Reuters and the Associated Press.

Morgan Stanley Dean Witter, the company’s lead underwriter, had planned to set the final pricing of the 500 million shares this week (March 19), but yesterday it decided to hold off another week (see Agere Sets Pricing Date and Range). Then today, Agere changed the number of shares offered from 500 million to 600 million. It also reduced the price of those shares from a range of between $12 and $14 a share to between $6 and $7, according to the S-1.

This revised offering price cuts the amount that could be raised almost in half to between $3.6 billion and $4.2 billion. The company had been planning the second largest IPO ever, expecting to generate between $6 billion to $7 billion.

News of the revision comes as no surprise to investors and analysts, who had been talking about the possibility since last week (see Components Companies Chill Out).

A plummeting Nasdaq over the past few weeks has caused several component companies to put off their IPOs indefinitely (see IPO Window Shuts Tighter and Chorum Pulls IPO ). But until now Lucent hasn’t wavered in its push to get the Agere IPO out the door. Some in the industry wonder if Lucent’s overzealous need to make the IPO happen in poor market conditions speaks to the company’s financial troubles. With Lucent's stock trading at around $10 a share and a mountain of debt growing, the company is in need of cash (see Lucent Beefs Up Credit Line).

“You can count the number of IPOs on one hand that are waiting to go out,” says one analyst, who didn’t want his name used. “The fact that this is the only one going forward ought to tell you something. In a perfect world, I’m sure they would probably wait for the market to firm up.”

-- Marguerite Reardon, senior editor, Light Reading http://www.lightreading.com

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