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Agilent to Slash Jobs by 4,000

The maker of testing equipment blames cuts on a first-quarter loss as uncertainty in the economy continues to weaken demand.

February 22, 2003|P.J. Huffstutter | Times Staff Writer

Agilent Technologies Inc., the Palo Alto-based maker of high-tech testing equipment, said Friday that it would cut an additional 4,000 jobs, or more than 11% of its workforce, in an attempt to stem continuing losses.

Company executives blamed the harsh financial results on customers deciding not to purchase new equipment. Agilent's customers encompass a diverse group of companies in the communications, electronics and life sciences industries, ranging from chip maker Intel Corp. to drug giant Merck & Co.

"We need to size the company for the levels of orders and revenue that we have seen for the last five quarters," Chief Executive Ned Barnholt told analysts during a conference call Friday. "CEOs ... are trying to defer capital spending and hold on to cash."

For its fiscal first quarter, which ended Jan. 31, Agilent posted a net loss of $369 million, or 78 cents a share, compared with a loss of $315 million, or 68 cents, a year earlier. It is the sixth, and largest, loss in the last seven quarters.

Agilent's revenue fell slightly to $1.41 billion from $1.43 billion.

"The quarter turned out even tougher than we planned," Barnholt said.

News of the layoffs boosted Agilent's shares despite the quarterly loss. The company's shares rose 85 cents Friday to $13.45 on the New York Stock Exchange.

Many customers remain unwilling to buy new equipment because of economic weakness or geopolitical uncertainties, Barnholt said. That has extended a pattern of weak orders that the company has struggled against over the last two years, executives said.

"We would like to think after going on three years that our markets outside of wire-line telecom would begin to recover, but we're not going to count on it," Agilent Chief Financial Officer Adrian Dillon said during the call.

It's been a rough couple of years for the leading maker of scientific instruments and analysis equipment. The onetime Wall Street darling raised $2.1 billion when it went public in November 1999, spinning off from Hewlett-Packard Co.

But the once-powerful tech firm has been paring expenses over the last year as sales tumbled, led by slackening demand for gear used to test telecommunications equipment.

Some of the biggest cuts have been in staffing. Over the last 15 months, Agilent has cut 8,000 jobs, most of them in the U.S. Before the cuts were announced Friday, Agilent already was in the process of laying off 2,500 workers.

Company officials said the latest cuts would occur in the next few months and would save about $125 million a quarter. Officials said they still were deciding where the 4,000 cuts would occur.

Agilent expects the reductions to allow the company to break even by the end of its fiscal year in October. For the second quarter, the company projected revenue of $1.4 billion to $1.5 billion and a per-share loss of 10 cents to 20 cents before restructuring charges.

After all the cuts are completed, the firm expects to have about 30,000 employees worldwide, down from 48,000 in 2001.

"It's pretty clear that they are trying to get ahead of the curve," SG Cowen Securities analyst Richard Chu said about the latest job cuts.

Chu said he does not own Agilent shares. SG Cowen was one of seven co-managers of Agilent's initial public offering.

Bloomberg News was used in compiling this report.

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