Agere Systems reports for the third quarter of 2003

24 July 2003 Allentown PA Lightwave Europe -- Agere Systems today reports that revenues for its Q3 of fiscal 2003, ended June 30, 2003, were USD 456 million, up 3% on Q2. Revenues in Q302 were USD 498 million.

Jul 24th, 2003

24 July 2003 Allentown PA Lightwave Europe -- Agere Systems today reports that revenues for its Q3 of fiscal 2003, ended June 30, 2003, were USD 456 million, up 3% on Q2. Revenues in Q302 were USD 498 million.

Net loss on a reported or GAAP basis for the June quarter was USD 78 million or USD 0.05 per share, an improvement of USD 47 million, or 38% on Q2 03, and an improvement of USD 254 million, or 77% on Q3 02.

Pro forma net loss was USD 74 million, or USD 0.04 per share in Q303. This was an improvement of USD 31 million, or 30% on Q203, and an improvement of USD 34 million, or 31% from Q302.

Cash and cash in trust at the end of the June quarter increased by USD 4 million sequentially to USD 749 million, with USD 566 million in excess of short-term debt, and USD 101 million in excess of total debt.

Cash used in operating activities and capital expenditures was USD 39 million, which included USD 33 million used for restructuring and related activities and USD 7 million used in discontinued operations. The company's ongoing operations generated a positive cash flow of USD 1 million in the June quarter.

"We are pleased with the continued improvements in our financial performance," said John Dickson, president and CEO, Agere Systems. "We grew our revenues for the second straight quarter and reported positive cash flow from ongoing operations. We have now essentially completed our manufacturing consolidation plan, and have reduced our net loss every quarter during the fiscal year.

"Going forward, our continued investments and market penetration in key areas such as storage SOCs, mobile terminals, ATM, SONET/SDH and storage area networking segments should position us for success as our end markets gain momentum."

Results by segment
The Client Systems Group, which includes chips and software for mobile terminals, storage, PC connectivity and Wi-Fi applications, reported revenues of USD 324 million for the June quarter, up 3 percent from revenues of USD 316 million in the March quarter. This increase was due to growth in mobile terminals and storage solutions. The group posted revenues of USD 330 million in the year-ago quarter.

Key achievements
+ Agere was ranked the worldwide leader in providing integrated circuits for the hard disk drive market by research firm IDC. Agere also has number one positions in sales of storage system-on-a-chip solutions and preamplifiers.

+ Introduction of an integrated chip set solution that combines Agere's Wi-Fi and voice-over-IP technologies to enable low-cost, mobile phone calls over the Internet. Through an agreement with NTT-ME Corp., Agere will offer a development platform and reference design that allow handset manufacturers to build phones that are interoperable with the broadband voice-over-IP networks being deployed by NTT, Japan's largest broadband service provider.

+ Shipment of the industry's first advanced 0.25-micron silicon germanium (SiGe) preamplifiers for use in hard disk drives. The TrueStore(tm) preamps, which are being sampled with leading hard disk drive manufacturers, offer high-bandwidth, low-power, cost-effective solutions for creating extremely fast desktop and high-end storage devices.

+ Conducted interoperability testing of Agere's GPRS/EDGE solutions in field trials with several service providers.

+ Announcement that Universal Scientific Industrial Co. Ltd. (USI), an original design manufacturer based in Taiwan, is using Agere's Wi-Fi networking chip to deliver the industry's first small-form-factor 802.11b/Bluetooth wireless module specifically designed for handheld consumer devices.

The Infrastructure Systems Group reported revenues of USD132 million, up 4% from revenues of USD 127 million in Q2, due to strength in sales of chips for wireless infrastructure and DSL applications. The group posted revenues of USD 168 million in the year-ago quarter.

Key achievements
+ Agere was ranked the number one provider of semiconductors for wired communications applications by market research firm iSuppli. The company also has number one positions in the supply of SONET/SDH framers and mappers, and ATM chips.

+ Introduction of Festino system card solutions for multiservice wireline and wireless networking equipment. The solutions, which will consist of validated reference designs, can reduce equipment system development costs by more than 50 percent, and cut the cost to deploy services for communications service providers by more than 30 percent.

+ Introduction of six traffic management chips that boost capacity, while lowering the cost of telecommunications equipment. One of the chips, the APP550TM, is the world's first to integrate traffic management, ATM, segmentation and reassembly, and Ethernet Media Access Controller on a single device running at 5 gigabits per second.

+ Announcement that Laurel Networks is utilizing Agere's PayloadPlus traffic management and network processor solutions in its award-winning ST200 service Edge Router. Laurel is deploying the ST200 in networks across the United States, Europe and Asia to provide a wide range of switched and routed services.

+ Announcement that LG Electronics, one of Korea's largest communications equipment manufacturers, is using Agere's ATM traffic management solutions in its wireless and router equipment.

Outlook
"We remain focused on achieving positive net income on a GAAP basis in the September quarter," said Dickson. "We recognise, however, that volatility in Asian markets will pose a challenge, and are therefore guiding to a net income of about breakeven, plus or minus 1 US cent per share, for the fourth fiscal quarter."

The company expects revenues in the September quarter to be up approximately 5 to 8% from the June quarter. Revenues for the full fiscal year 2003 are expected to be in the range of USD 1.81 to USD 1.83 billion, slightly lower than the company's previous guidance of USD 1.85 billion.

The company expects reported net income to be about breakeven with a range of plus or minus 1 US cent per share, which would be an improvement of USD 0.04 to USD 0.06 sequentially. For the full fiscal year, the company expects a net loss of USD 0.20 to USD 0.22 per share.

On a pro forma basis, Agere also expects net income to be about breakeven, with a range of plus or minus 1 US cent per share, in the fourth fiscal quarter. Pro forma net loss for the full fiscal year is expected to be in the range of USD 0.17 to USD 0.19 per share.

The company expects to end the September quarter with over USD 750 million in cash and cash in trust, and expects to report positive cash flow, including all operations and restructuring, exclusive of any financing.

The company notes that it is not certain whether or not it will be required to take a non-cash pension settlement charge in the fourth fiscal quarter, and the company's guidance excludes any impact of such a charge.

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