Agilent Technologies Inc has reported a smaller-than-expected loss in the company's 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"
"This is by far the worst industry downturn I've seen in my 34 years with the company," said Ned Barnholt, president and CEO of Agilent. "Extraordinary business conditions, unfortunately, require unusual actions."
Agilent said it expects a slight increase in total orders during the current fiscal quarter, but another drop in revenues--to the $1.3-to-$1.5bn range--will lead to an expected loss of $0.50-to-$0.70 per share, excluding restructuring charges.
The Palo Alto-based supplier of test systems, semiconductors, and instruments 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. Compared to a year ago, Agilent's revenues were 25% lower than $2.4bn in fiscal Q3 of 2000. In the just-ended fiscal quarter, Agilent's orders for semiconductors and chip testing systems were down sharply from a year ago.
Agilent said it beat Wall Street's consensus for earnings before goodwill. It reported a loss of $0.24 per share before goodwill vs. what the company said was a consensus for a loss of $0.35 per share. (Estimates from First Call/Thomson Financial showed the consensus for a loss at $0.34 per share.) This loss excludes a one-time $74m charge for information systems investments and a $39m net (non-cash) investment gain.
Including one-time items, the company's net loss reached $219m, or $0.48 per diluted share, compared to a net income of $155m, or $0.34 per diluted share, last year.
"Based on our outlook earlier in the year, we implemented a variety of aggressive cost-control measures -- including a temporary 10% pay cut -- to try to avoid layoffs," Barnholt said. "The measures to date have had a positive impact, but the business environment in our key industries continued to deteriorate this quarter. And the outlook going forward is for a slow and gradual recovery.
"We are now taking additional actions to bring the size of our workforce more in line with anticipated business levels," the CEO added.
The layoffs will result in a $200m restructuring charge to cover severance packages and related costs, according to Agilent. The company said it is expecting about $500m in annualised savings as a result of the workforce reduction.
Agilent, a spinoff from Hewlett-Packard Co, said its semiconductor product revenue fell 4% sequentially in the just-ended quarter to $425m, but those sales were 28% lower than $591m in the period last year. Lower revenues caused Agilent's chip business to suffer a pro forma loss of $71m from continuing operations, compared to earnings of $164m.
Orders for the company's semiconductor products totaled $277m in the fiscal third quarter, a decline of 62% from $730m in the period last year but up 39% from the prior three-month period.
Agilent said revenues for semiconductor test systems dropped 55% to $108m in the fiscal third quarter compared to a year ago but sales were up 10% sequentially. Orders for chip test systems were 74% below a year ago at $81m in the just-ended quarter, which was 10% higher than the prior quarter, Agilent said.