Agere Systems Reports Results for the First Quarter

Agere Systems (NYSE: AGR.A, AGR.B) today reported that revenues for the first quarter of
fiscal 2005, ended December 31, 2004, were $410 million, at the high end of
the guidance range provided by the company in October. The company's revenues
were $439 million in the September quarter and $516 million in the year-ago
quarter.

The company reported a GAAP net loss of $67 million, or $0.04 per share,
including $60 million in net restructuring charges and related costs. For the
September quarter, Agere reported a GAAP net loss of $127 million, or $0.07
per share, including $132 million in net restructuring and other charges. In
the year-ago quarter, the company reported a GAAP net loss of $39 million, or
$0.02 per share.

Pro forma net loss was $8 million, or breakeven per share, in the December
quarter, better than guidance, compared to pro forma net income of $6 million,
or breakeven per share, in the September quarter, and pro forma net income of
$28 million, or $0.02 per share, in the year-ago quarter.

Pro forma net income excludes gain or loss from the sale of, and income or
loss from, discontinued operations; restructuring-related charges included in
costs, primarily increased depreciation; certain other non-cash charges; net
restructuring and other charges; purchased in-process research and development
charges; amortization of acquired intangible assets; net gain or loss from the
sale of operating assets; certain tax adjustments; cumulative effect of an
accounting change and certain non-recurring charges.

The company posted cash flow from operations, less capital expenditures,
of $10 million, its sixth consecutive positive quarterly result. During the
quarter, the company repaid an accounts receivable securitization facility
that matured in October. Cash and cash in trust, less total debt, improved by
$26 million to a total of $256 million from the September quarter, reflecting
positive cash flow.

"We achieved strong design win momentum in all areas of the business and
we are pleased by our continued strength in storage where we increased
shipments of read channels and system-on-a-chip solutions to key customers
targeting PC and consumer electronics applications," said John Dickson,
president and CEO, Agere Systems. "Overall, we have positioned ourselves for
future growth and we expect to increase revenues and improve profitability as
we move beyond the March quarter into the second half of fiscal 2005."

Product and Customer Highlights

Recent company highlights include:
-- Introduction of the industry's first complete storage chip set for
portable consumer electronics disk drives. The TrueStore(R) CE
family includes a read channel, preamplifier, motor controller and
hard disk controller optimized for the development of small, ultra-
low-power, high-capacity drives used in media players, mobile
phones, digital cameras and other handheld devices.

-- Announcement of the general availability of a dual-mode, W-EDGE
baseband chip set and software combining 3G/UMTS and EDGE
technologies for mass-market multimedia mobile phones. The
Sceptre(R) HPU solution, which was sampled to lead customers last
July, enables the continuous delivery of 3G services to consumers
even when outside of UMTS network coverage.

-- Introduction of a Unified Media Framework that supports the rapid
development across all platforms of mass-market, multimedia mobile
phones capable of digital photo imaging, MPEG-4 video playback, and
MP3 music without requiring an additional multimedia co-processor.
Complete solutions are now available for customer samples.

-- Shipments to several original design manufacturers of the
industry's first single-chip, 48-port Gigabit Ethernet switching
solution and the lowest power physical layer (PHY) device for
enterprise networks.

-- Announcement of a new multi-standard platform for high-speed serial
interfaces in storage and enterprise network products. This new
serializer-deserializer (SerDes) platform, which supports 90
nanometer designs operating at 6.25 gigabits per second, enables
manufacturers to create interface solutions across any serial
standard, including Serial ATA, Serial-Attached SCSI (SAS), Fibre
Channel and PCI Express.

-- Agreement with Digital 5, a leading provider of software for
streaming multimedia, to deliver next-generation digital media
server and network-attached storage solutions for the emerging
digital home. These solutions will be available for customer
samples this quarter.

-- Selection by Samsung for its Most Valued Partner Award during its
Telecom Partner Day held in December. This is the third
consecutive year that Samsung has named Agere as a top supplier.

Outlook

In the March quarter, the company expects to report revenues in the range
of $400 million to $420 million. The company expects GAAP net loss to be in
the range of $0.03 to $0.05 per share, including restructuring-related items.
Pro forma net loss is expected to be in the range of breakeven to a loss of
$0.02 per share.

Earnings Webcast

Agere Systems will host a conference call today at 8:30 a.m. EST to
discuss its financial results and outlook. To listen to the conference call
via the Internet, visit http://www.agere.com/webcast. Subsequent to the
conference call, a replay will be available at the same web address.
Supplemental financial information is also available on the company's website
at http://www.agere.com/webcast.

Agere Systems is a global leader in semiconductors for storage, wireless
data, and public and enterprise networks. The company's chips and software
power a broad range of computing and communications applications, from cell
phones, PCs, PDAs, hard disk drives and gaming devices to the world's most
sophisticated wireless and wireline networks. Agere's customers include top
manufacturers of consumer electronics, communications and computing equipment.
Agere's products connect people to information and entertainment at home, at
work and on the road -- enabling the connected lifestyle.

This release contains forward-looking statements based on information
currently available to Agere. Agere's actual results could differ materially
from the results stated or implied by those forward-looking statements due to
a number of risks and uncertainties. These risks and uncertainties include,
but are not limited to, our reliance on major customers and suppliers, our
ability to keep pace with technological change, our dependence on new product
development, price and product competition, availability of manufacturing
capacity, customer demand for our products and services, and general industry
and market conditions. For a further discussion of these and other risks and
uncertainties, see our annual report on Form 10-K for the fiscal year ended
September 30, 2004. Agere disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.

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