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News > Technology
Agilent logs loss, warns
August 20, 2001: 5:34 p.m. ET

Technology company sees red ink, expects more as tech slump continues
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NEW YORK (CNNfn) - A protracted downturn in capital spending by technology companies led to a sharp fiscal third-quarter loss for Agilent Technologies, where last year it logged a profit.

The company also said Monday it will lay off roughly 9 percent of its total workforce and warned that its fiscal fourth-quarter results will come in far below the Street's most recent expectations.

"Customers are making strides at reducing their inventories, but capacity is still far in excess of demand in some of our markets," Ned Barnholt, Agilent's president and chief executive, told analysts during a teleconference Monday evening.

"These issues are going to be with us for the next few quarters," Barnholt added.

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After the close of trading Monday, Agilent (A: Research, Estimates), which makes test and measurement equipment, semiconductors and chemical analysis tools, said it lost 24 cents per share during the quarter ended July 31. That excludes one-time items and compares with a profit of 34 cents per share during the same period last year.

Including restructuring charges and other one-time items, Agilent's net loss for the third quarter was $219 million, or 48 cents per share, compared with a net profit of $155 million, or 34 cents per share, in the year-ago period.

At $1.8 billion, Agilent's fiscal third-quarter revenue fell 33 percent from $2.7 billion in the year-ago quarter. Analysts generally had expected a third-quarter loss of 35 cents per share on revenue of $1.8 billion, according to a survey conducted by First Call.

Agilent, formerly a unit of Hewlett-Packard, also said Monday it will reduce its workforce by approximately 4,000 people, or about 9 percent, by the middle of next year. It's the latest move the company has taken in an effort to return to profitability.

In addition to its former corporate parent, Agilent lists high-tech heavyweights such as Cisco Systems and Nokia at the top of its roster of customers. Many of its customers have substantially reduced their capital spending this year as they try to maintain profits in a sluggish economic environment.

Among the other steps Agilent has taken to get its expenses and cost structures more in line with significantly lower levels of orders, Agilent in early April implemented a temporary 10 percent payroll reduction, which became effective May 1. Executives said the payroll action alone would save about $70 million per quarter.

The company in recent months also had frozen hiring, cut back on its use of temporary workers, and reduced discretionary spending. It also has initiated short-term manufacturing closures to reduce production levels.

Barnholt credited the narrower-than-expected third-quarter loss in large part to the cost-reduction measures the company has taken, which he said have reduced the company's selling, general and administrative expenses by 23 percent year-over-year and 15 percent sequentially.

"The (cost-cutting) measures to date have had a positive impact, but the business environment in our key industries continued to deteriorate this quarter," Barnholt said.

After the company reported its fiscal second-quarter earnings in May, Agilent executives had said they were hoping to return to "modest profitability" in the fiscal fourth-quarter, depending on the rate of order improvement.

However, Barnholt on Monday said the company now expects to post a fourth-quarter loss ranging between 50 cents and 70 cents per share on revenue ranging between $1.3 and $1.5 billion.

By First Call's count, analysts most recently had been expecting a fourth-quarter loss of 17 cents per share on revenue of $1.8 billion.

Barnholt said Agilent is not able to give meaningful financial guidance for its fiscal year beginning in November.

Agilent expects to post restructuring expenses of roughly $200 million for severance packages and other costs associated with the job cuts. Overall, the company said its cost-cutting measures will result in about $500 million in annualized savings.

During the fiscal third-quarter, Agilent said its total orders, an indicator of future demand, were $1.3 billion, down 54 percent from the same quarter a year ago.

The company said that third-quarter orders for its communications and semiconductor products were especially weak, reflecting the severe slowdown that has plagued these industries in recent months. graphic

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.