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Agilent misses, warns
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May 17, 2001: 5:28 p.m. ET
HP spin-off falls short of estimates, sees more trouble ahead
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NEW YORK (CNNfn) - Agilent Technologies on Thursday reported a fiscal second-quarter operating profit that missed lowered expectations on a significant decline in orders.
And executives forecast more weakness in the current quarter, saying they expect a quarterly loss where previously they had been aiming for a profit.
The company, a former unit of Hewlett-Packard, which makes test and measurement equipment, semiconductors and chemical analysis tools, said it earned 26 cents per share, excluding a $100 million write-down of excess inventory.
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That compares with a profit of 35 cents per share during the same quarter last year and is a penny shy of the 27 cents per share analysts polled by earnings tracker First Call had expected. Those estimates were taken down from 34 cents per share when the company warned of a substantial shortfall in sales on April 5.
Including the inventory write-down and other one-time items, Agilent's net profit fell 42 percent to $96 million from $166 million during the fiscal second-quarter a year earlier.
Second-quarter orders, after cancellations, were $1.8 billion, a 41-percent decline from last year's second quarter and a 37-percent decrease compared with the prior quarter.
"This was a very challenging quarter due to the dramatic drop in new orders and a large number of cancellations," Ned Barnholt, Agilent's president and chief executive, said in a statement.
"As we said at the end of Q1, demand in the communications and semiconductor industries has dropped off as customers work through excess capacity and inventory. We're taking aggressive actions to respond to the weak business environment to get our expenses and cost structures more in line with the significantly lower levels of orders."
The company in recent months has frozen hiring, cut back on its use of temporary workers, and reduced all discretionary spending. Agilent also said it has initiated short-term manufacturing closures to reduce production levels. In early April, the company announced a temporary 10 percent payroll reduction, effective May 1. It said the payroll action alone will save about $70 million per quarter.
Looking ahead, Agilent said it expects to report fiscal third-quarter revenue "as low as $2 billion," and an operating loss ranging between 20 cents and 30 cents per share.
The most recent consensus estimate of analysts polled by First Call was for Agilent to log a third-quarter profit of 18 cents per share.
"While accurate predictions are extremely difficult, we feel we are at or near bottom and may see an improvement in orders later in the second half," said Barnholt.
"We are continuing to work aggressively on short-term expense controls and cost reductions. We hope to return to modest profitability in the fourth quarter of our fiscal year, which ends Oct. 31, depending on the rate of order improvement."
Shares of Agilent rose 22 cents on the New York Stock Exchange on Thursday ahead of the report, which was released after the close of trading. 
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