IPO Pros has the market covered: Sundays: This Week in IPOs Tuesdays: This Week's Secondaries Wednesdays: Upcoming Lockup Expirations Fridays: The Quiet Period

Click here for the latest from Ben Holmes.

Last week, only one deal priced -- and it was a disaster.

The IPO of Surebeam (SURE:Nasdaq - news - boards) priced at $10 and finished its first session down 14%. What was really surprising was how quickly the deal broke down. The concept of underwriters supporting new issues has gone the way of doctor's house calls and service stations.

This week is ambitious in light of last week's carnage. One deal stands out based solely on its size. I'm talking about Agere, the wholly owned subsidiary of Lucent (LU:NYSE - news - boards).

Here's a peek at the inner workings:

To call the Agere IPO a big deal would be like saying that the Grand Canyon is a big hole in the ground. It is 500 million shares.

After the offering, Lucent plans to distribute all of the shares of the common stock it then owns to Lucent's stockholders by the end of its current fiscal year on Sept. 30. Lucent is currently the company's largest client and has entered into a three-year product-purchase agreement that requires Lucent to buy at least $800 million worth in the first year, and at least $1 billion worth of products in each succeeding year.

Morgan Stanley Dean Witter (MWD:NYSE - news - boards), the lead underwriter, is also a significant selling stockholder in this deal. Morgan Stanley plans to acquire up to 200 million shares of Agere's Class A common stock from Lucent in a private placement prior to the closing of the offering.

In the private placement, Morgan Stanley plans to exchange debt obligations of Lucent held by Morgan Stanley for shares of Agere's Class A common stock held by Lucent.

The following statement, taken from the filing, is quite interesting:

"For purposes of determining the number of shares of our Class A common stock Morgan Stanley would receive in any exchange, Morgan Stanley and Lucent expect that the debt obligations Morgan Stanley would hold would be valued at fair market value on the date any exchange agreement is signed."

Consider the timing on this deal and the likely possibility that a Fed ease may come on or before the day this deal is priced. Now consider that Morgan Stanley is already long these debt securities and that the paper should increase in value as a result of a Fed easing.

Also consider that the shares Morgan Stanley receives in the exchange are valued at the IPO price -- less underwriting discounts and commissions. Note that Morgan Stanley began buying this debt in January, only when it was obvious that the Fed was in an easing posture.

Smart, smart guys over there.

Here are this week's deals:

AGERE SYSTEMS
IPO:	(AGR.A:NYSE)	Agere Systems designs, develops and manufactures opto-electronic components for communications networks and integrated circuits for use in a broad range of communications and computer equipment.
Deal size:	500,000,000
Price range:	12.00 - 14.00
Led by:	Morgan Stanley Dean
My take: 2/22/01 Price range changed from $15 - $20 to $16-$20 and shares increased from 370,310,000 on March 1. Right now, you cannot turn on the news or read a paper and not get the message that corporate capital expenditures for networking products and services are in a steep decline. Knowing this and knowing that the market for technology stocks, like Agere, is a tough, tough environment, you have to at least question the timing of this deal. Looking at the size of this deal, the financial results from Agere's business and the current market climate, it is difficult to hold much hope for a strong performance for this IPO. I expect this deal to trade flat to its IPO price with a possible yet unlikely small premium. Looking forward, it is even more difficult to predict a turnaround for the networking/semiconductor sectors. Because of this, my medium-term outlook for Agere is tepid at best.

QK HEALTHCARE
IPO:	(KRX:NYSE)	A national wholesale distributor of selected health care products to retailers, wholesale distributors and pharmacy benefit managers
Deal size:	11,000,000
Price range:	14.00 - 16.00
Led by:	Lehman Brothers
My take: 1/26/01 -- Price reduced from $14-$16 to $13-$17 on Jan. 26 and shares reduced from 13.4 million to 11 million. The company operates as a wholesale distributor and supplier of pharmaceutical and hospital/surgical products. Its strategy is to take advantage of temporary margin increases by buying products through price incentive programs and in anticipation of price increases. This seems to work for them. From the filing: "From fiscal 1996 through fiscal 2000, our annual net sales grew from $328.3 million to $1,242.1 million, representing a compound annual growth rate of 40%. Our income from operations grew over this period from $4.6 million to $66.1 million, representing a compound annual growth rate of 95%." Wow. Truth is, this is a very clean deal with an amazing history of growth. This is exactly the kind of deal I like to see and I am expecting a respectable performance in the immediate sense and going forward.