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Lucent strikes deal for programmable chips

The networking equipment maker agrees to buy chipmaker Agere in a stock deal, a significant step for Lucent into the programmable network processor market.

Lucent Technologies today said it has agreed to acquire chipmaker Agere in a stock deal valued at $415 million.

The deal represents a significant step into the programmable network processor market for Lucent, a networking equipment leader which already has a serious presence in the communications chip business.

Privately held Agere makes processors for routers, switches and other networking hardware. The technology allows network administrators to program hardware to handle more data at higher speeds.

The market for programmable processors is widely considered the next big thing in the networking industry. IBM and several networking upstarts are working on their own programmable chips, while semiconductor giant Intel is scheduled to release its own technology this year. Such chips serve as the nerve center for switches and other telecommunications equipment.

Under terms of the deal, Lucent will offer 8 million shares of its stock for all outstanding Agere stock. Based on Lucent's closing price yesterday of $51.44, the transaction would be worth approximately $415 million, the company said in a statement.

Agere?s 90 employees will join Lucent's Networks and Communications unit, but remain at Agere's headquarters in Austin, Texas. Agere chief executive Ford Tamer will remain general manager for the unit's network processor group.

Lucent will take a one-time charge in the quarter ending June 30, when the transaction is expected to be completed. The deal is expected to be neutral to Lucent's earnings in fiscal 2000, the company said.