PALO ALTO, Calif. -- Hit hard by the current semiconductor downturn, Agilent Technologies Inc. today announced plans to reduce its headcount by an additional 4,000 jobs, and reported a loss and lackluster sales in its fourth quarter ended Oct. 31.
In August, Agilent announced its first workforce reduction of 4,000 jobs. With the announcement of an additional 4,000 job cuts today, the Palo Alto-based test, measurement, and chip supplier will reduce its overall workforce by 8,000 people, or 18%, by the middle of 2002.
Agilent's senior management will also take a 10% pay cut starting in the first quarter of this year. Depending on local laws and regulations, it will also implement the equivalent of a 5% pay reduction for the rest of its employees starting in Q2.
The combination of these actions is expected to save the company approximately $700 million on an annualized basis, with one-time restructuring expenses of about $175 million.
The announcements follow a poor quarter for the company. It posted sales of $1.6 billion for the fourth quarter, a 47% drop from the like period a year ago. On an earnings-before-goodwill basis, the company lost $275 million, or $0.60 cents per share, compared to a profit of $328 million, or $0.71, a year ago.
Net orders declined 8% from last quarter and 56% from the fourth period a year ago. Cancellations totaled about $250 million forthe quarter, continuing at the same level as in the previous quarter.
"The persistent downturn in the key markets we serve kept orders very weak in our test and measurement and semiconductor products businesses," said Ned Barnholt, Agilent president and CEO. "While orders have remained at about the same level for the past five months in these businesses, they were below our expectations for the fourth quarter," he said.
"Continued weakness in customer demand clearly indicates that the recovery will be delayed and more gradual than we expected," said Barnholt. "As a result, we are taking additional steps to further reduce our cost structure and return the company to profitability."
Among those steps include more workforce reductions and pay cuts. "These latest cost-cutting actions--coupled with strong new product introductions and entry into new markets--are intended to return Agilent to profitability sometime during our third fiscal quarter of 2002, independent of how much improvement we see in the industry and the economy at large," Barnholt said.
While Agilent expects the level of cancellations to diminish slightly, the company does not assume any significant recovery in Q1. Agilent expects Q1 revenue to be between $1.25-to-$1.4 billion, with an expected loss of between $0.40-to-$0.60 per share, excluding restructuring charges.
"These are challenging times, but I remain confident about the long-term future of our company," said Barnholt. "We are well-positioned to gain additional market share and emerge from the downturn an even stronger company."
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