Lucent Technologies Plans to Sell Its Power Systems Business - Company Business and Marketing

Cambridge Telcom Report, May 8, 2000

Lucent Technologies (NYSE: LU) Wednesday announced it is seeking a buyer for its Power Systems business, a leading supplier of power products for the telecommunications and computer industries.

"The decision to sell our Power Systems business is part of Lucent's ongoing effort to sharpen its focus on its core business -- communications networking and providing Internet infrastructure -- while better leveraging our capital and R&D investments," said John Dickson, executive vice president and CEO of Lucent Technologies' Microelectronics and Communications Technologies. "Our Power Systems business has a lead market position, double-digit growth, world-class R&D and experienced leadership, all of which will make this business extremely attractive to potential buyers."

Lucent will begin discussions with potential buyers shortly. It expects the sale to move quickly and a buyer to be identified within six months.

Lucent's Power Systems products provide the power supply, power conversion and backup power equipment for wireless, optical, switching and other equipment that run the world's communications networks. It supplies computer manufacturers with a full line of power products, including its new Titania power products, the industry's smallest, most reliable and flexible power supplies designed for microprocessors and other semiconductor devices. It also provides custom design, engineering, installation and technical support to customers around the world.

The customer list for Power Systems has expanded sevenfold in the past five years and includes virtually all of the major equipment manufacturers in the telecommunications and computing equipment markets. Lucent will continue to be a significant customer for the Power Systems business.

"This move will enable Power Systems to operate in a space where it can even better serve customers, continue its strong growth and strengthen its position as the premier power supply manufacturer in the world," said Bruce Brock, chief operating officer and vice president of Power Systems. "Lucent will be looking for a buyer who shares our commitment to customers and appreciates the value of the employees who made this business a market leader."

Some 4,700 employees work for Lucent's Power Systems, which is headquartered in Mesquite, Texas, and has 30 locations around the world. Its two largest facilities are the 2,200-employee, one million square-foot plant in Mesquite, the world's largest power supply manufacturing facility under one roof, and its facility in Matamoros, Mexico, with nearly 2,000 employees. Power Systems is the only U.S. manufacturer to be awarded the Deming Prize for Quality, and in 1992 it was awarded the Shingo Prize for Quality.

For the third year in a row, Micro-Tech Consultants, a market research firm specializing in the power supply industry, ranked Lucent's power business as No. 1 in worldwide sales. According to Micro-Tech, the global demand for power supplies is growing at nearly 10 percent a year and is expected to reach $24 billion this year. Lucent's Power Systems is growing at double the market rate. In 1999, Power Systems generated about $1.2 billion in total revenues.

Lucent Technologies, headquartered in Murray Hill, N.J., USA, designs and delivers the systems, software, silicon and services for next-generation communications networks for service providers and enterprises. Backed by the research and development of Bell Labs, Lucent focuses on high-growth areas such as optical and wireless networks; Internet infrastructure; communications software; communications semiconductors and optoelectronics; Web-based enterprise solutions that link private and public networks; and professional network design and consulting services. For more information on Lucent Technologies, visit its Web site at http://www.lucent.com .