There's good and bad news for Agilent Technologies
The good news is that the company's massive order cancellation rates are finally slowing down. But the bad news is that company executives do not see any signs of a recovery in its component or equipment businesses.
As reported, Agilent on Monday posted a smaller-than-expected loss in its fiscal third quarter, but it also announced plans to cut 4,000 jobs, or 9% of its workforce, to restore profitability "as soon as possible".
The Palo Alto-based supplier of test systems, semiconductors, and instruments also reported a 33% sequential drop in total revenues to $1.8bn in the fiscal third quarter, ended July 31, compared to $2.7bn in the prior quarter. It lost $219m, or $0.48 per diluted share, compared to a net income of $155m, or $0.34 per diluted share, last year.
During the quarter, the company recorded some $240m in cancelled orders, according to company officials. This compares to a staggering $500m in cancelled orders in the second quarter of this year.
The order cancellations involve the company's entire product line. As reported, Aglient's test and measurement business had its share of order cancellations and losses.
Its other core business--semiconductors--had order cancellations of between $60-to-$65m in the third quarter, according to Agilent.
In the fourth quarter of this year, the company expects to cut its order cancellation rates to about $100m, said Bob Walker, vice president and CFO for Agilent, in a conference call with analysts.
But that does not mean that the company will experience any recovery in the near term, warned Ned Barnholt, president and CEO of Agilent, in the conference call.
"Earlier this year, we thought we would see a recovery by this point," Barnholt said. "But the downturn is deeper and longer than what we thought," he said.
"We are not seeing any definitive signs of an upturn," he added.
And, Agilent may spill red ink for some time. The company's break-even point is $1.9bn in terms of sales for a given quarter.
"I think we will hit $1.9bn in terms of quarterly sales in 2002," Barnholt said. "I can't tell if it's Q1, Q2, or Q3 of 2002."