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Agilent warns, slashes pay
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April 5, 2001: 5:18 p.m. ET
Technical equipment maker imposes severe cost-cutting as demand falls
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NEW YORK (CNNfn) - Agilent Technologies said Thursday that major customer demand has dropped dramatically in the last six weeks and that second-quarter revenue will be below company estimates. The company said it will temporarily cut employee pay by 10 percent to cut costs.
Agilent said the economic downturn has been more severe than expected in the company's second quarter, and that as a result, revenue for the period ending April 30 would fall below $2.9 billion. The current consensus estimate of analysts polled by earnings tracker First Call is for second-quarter revenue of $2.85 billion.
In addition to pay reductions for its 48,000 employees worldwide, the company is taking other cost-cutting measures including no more external hiring or replacement after attrition, significantly reducing use of temporary workers and consultants, slashing spending on office equipment and other discretionary items and limiting travel to customer-related activities.
 Agilent anticipates the measures will save about $70 million a quarter through July 31.
Agilent (A: up $2.53 to $30.62, Research, Estimates) a spinoff of Hewlett-Packard (HWP: up $3.32 to $30.77, Research, Estimates) that makes test and measurement equipment, semiconductors and chemical analysis tools, said it began hiring fewer people and reducing discretionary spending months ago as demand from its major customers has dropped.
"Given the uncertainty about the duration and severity of the economic slowdown and its impact on our customers, we are no longer able to provide meaningful guidance for the year," CEO Ned Barnholt said. "The dramatic change in orders will obviously have a negative impact on our second-quarter results."
Analysts on average are expecting second-quarter earnings of 34 cents a share for Agilent and earnings of $1.65 a share for the full fiscal year, according to First Call.
Temporary pay reductions began April 1 for Agilent's 200 senior managers. Pay cuts for the rest of the staff begin May 1. The reductions will last through the third quarter ending July 31, but could be extended to the fourth quarter.
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Agilent beat first-quarter forecasts on Feb. 20, but warned then it would not meet revenue growth targets for the fiscal year because of waning demand for the company's products. 
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