Agere IPO Lowered Again

Distressed by weakening demand in the optical components market and a lackluster sentiment toward new issues on Wall Street, Lucent Technologies again lowered the per-share price of the IPO of Agere Systems, its optoelectronics unit. The adjustment shaved about $7 billion off the spin-off’s estimated post-IPO market capitalization.

But at the same time that Lucent lowered the IPO share price to between $12 and $14 per share, it raised the total number of shares for sale to 500 million from 370.3 million, according to an amended S1 filed with the Securities and Exchange Commission. If priced at the high end of the range, the IPO would still raise about $7 billion, giving Lucent net proceeds of about $3.75 billion. Lucent is counting on the IPO to boost its short-term cash needs and possibly help reduce its debt load.

The IPO of Agere--a developer of optical components and integrated circuits--originally was priced at $15 to $20 per share, then changed to $16 to $19 per share. At the high end of the current range--$14 per share--Agere would have a post-IPO market valuation of about $18.2 billion, down from $25.5 billion, based on 1.3 billion common shares outstanding.

In the amended offering, the number of class A common shares was increased to 300 million from 222.7 million, and lead manager Morgan Stanley agreed to sell an additional 52.3 million shares, bringing its total to 200 million shares. Seven underwriters were added to the deal, including Bear Stearns, Deutsche Banc Alex Brown, J.P. Morgan, and Salomon Smith Barney.

Last week, in its first amended filing, Agere issued a warning that a decrease in revenue for the current quarter could result in a “significant” operating loss. Agere’s customer base is highly concentrated, according to the filing.

“We are currently experiencing softening demand for our optoelectronic components and our integrated circuits from a number of our large customers, including Lucent,” the filing said. A number of those customers have delayed or cancelled product orders during the quarter, because of weakness in their own markets, the filing said.

For fiscal 2000, Agere recorded revenue of $4.7 billion and a net loss of $76 million. Optical components accounted for about $1.2 billion, or 25.5% of sales, and an operating loss of $127 million. The other 74.5% was derived from sales of silicon chips and wireless local area networking products. These product groups generated operating income of $283 million in fiscal 2000.