PALO ALTO, Calif. -- Executives from Agilent Technologies Inc. blamed the company's financial woes on several factors, especially "very weak" sales and losses in its flagship test and measurement business.
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" (see Aug. 20 story ).
The Palo Alto-based supplier of test systems, semiconductors, and instruments also reported a 33% sequential drop in total revenues to $1.8 billion in the fiscal third quarter, ended July 31, compared to $2.7 billion in the prior quarter. It lost $219 million, or $0.48 per diluted share, compared to a net income of $155 million, or $0.34 per diluted share, last year.
Dragging the company down in the quarter was its test and measurement business. In total, this segment reported a loss of $151 million in the third quarter, compared to a profit of $122 million in the like period a year ago.
In this segment, the company also reported sales of $1.115 billion in the quarter, a 26% drop over the like period a year ago. Orders were $753 million in the quarter, a 57% decline from a year ago.
Within Agilent's test and measurement sector, the company makes instruments, automatic test equipment (ATE), and other products. During the quarter, the company's ATE business appears to have suffered the most. Other ATE suppliers--including Advantest, Credence, LTX, Teradyne, and others--are also suffering due to the current downturn in the test business.
There is still some demand for chip testers, but ATE vendors will be confined to "technology buys" for at least the "next few quarters," said Ned Barnholt, president and CEO of Agilent, in a conference call to analysts on Monday.
"We are seeing new semiconductor devices that can't be tested on last year's testers," Barnholt said. But on the other hand, there will be an "excess of (ATE) capacity for the next few quarters," he added.
That's bad news for Agilent. "Order cancellations (of Agilent's ATE products) slowed in the quarter, but incoming orders were very weak," added Bob Walker, executive vice president and chief financial officer, during the conference call.
Agilent's semiconductor-based ATE business realized some $81 million in orders for the third quarter, a 74% drop from the like period a year ago. Sales in this segment were $108 million in the quarter, a 55% decline from a year ago.
The company's communications-oriented test business realized $501 million in orders for the quarter, down 54% from the like period a year ago. Sales in this segment were $747 million in the period, down only 16% from last year.
Its general-purpose test business had $211 million in orders, down 52% from a year ago. Sales were $260 million, a 33% drop from a year ago.