Agilent Reports Fiscal Second Quarter Revenues of $1.47 Billion

5/21/2003 - Agilent Technologies Inc. (NYSE: A) reported orders of $1.53 billion and revenue of $1.47 billion for the fiscal second quarter ended April 30, 2003. The company reported a GAAP net loss of $146 million, or $0.31 per share, which includes $74 million of net restructuring charges and intangibles amortization. Excluding those items, Agilent reported a net loss of $72 million, or $0.15 per share.

"Our second quarter results were mixed," said Ned Barnholt, Agilent chairman, president and chief executive officer. "We're encouraged by orders and revenue that came in near the top of our expectations, despite world events. Earnings, however, were at the low end of our range because of delays in realizing restructuring savings as well as ongoing pricing pressures in our markets. But, we did achieve $35 million in structural cost reductions during the quarter, and we reduced headcount by nearly 2,500. We remain committed to achieving an operating breakeven of $1.45 billion in the fourth quarter of this year."

Overall, Agilent's second-quarter orders and revenue were in the same range as those of the past six quarters. The company reported a rebound in semiconductor test equipment orders, which reached their highest level in two-and-a-half years. Semiconductor component orders were also seasonally higher, although they remained well below last year's second-quarter spike. Activity in Agilent's other business segments was basically flat compared to the prior year.

The company also demonstrated good balance sheet management during the quarter, generating $28 million from working capital despite sequentially higher revenue. Capital spending, at $38 million, was about $50 million below depreciation expense.

"We continue to invest in Agilent's future by maintaining our significant investment in R&D," Barnholt said. "This enables us to keep delivering innovative new products to our customers, and has resulted in our winning market share across many of our businesses in the first half of the year."

Looking ahead, the company said it sees no material change in the outlook for its end markets. Agilent expects third-quarter revenue in the range of $1.45 billion to $1.55 billion. Earnings before restructuring and amortization charges are expected to be in a range of a loss of $0.10 per share to an operating breakeven.

"Our fourth-quarter priority remains firmly focused on achieving a $1.45 billion operating breakeven," Barnholt said. "We are confident that by reaching this milestone, we will have laid the foundation for sustained profitability in 2004."

Second quarter Test and Measurement orders were down 5 percent from one year ago and were up 2 percent from the first quarter. By market segment, communications test orders were down 7 percent from last year because of weakness in the wireline test market, and were down 1 percent compared to the first quarter. General purpose test was flat compared to last year and up 11 percent from a very soft first quarter despite continued weakness in aerospace and defense. Second-quarter revenues of $652 million were off 1 percent from last year and up 3 percent sequentially. Aggressive restructuring helped comparative operating results. The second-quarter operating loss of $103 million was $29 million better than first quarter results on only $19 million higher revenues. The operating loss was reduced by $69 million compared to last year despite $8 million lower revenues.

As expected, the Automated Test segment rebounded from the first quarter weakness caused by both geopolitical uncertainty and a temporarily weak flash memory test market. Second-quarter segment orders of $219 million were up 11 percent from last year to the highest level since the first quarter of 2001. Sequentially, orders were up 90 percent, with all semiconductor test products up sharply. Revenues of $153 million were flat with last year and up 13 percent from the first quarter. Automated Test's second quarter book-to-bill ratio of 1.43 was substantially ahead of the industry's April reading of 1.21. The second quarter operating loss of $37 million was affected by a $5 million inventory charge. Adjusted for that charge, operating results were essentially equal to last year on similar volume and $16 million better than the first quarter on $17 million higher volume.

Semiconductor Products' orders of $420 million were down 12 percent from last year and were up 10 percent from the first quarter. Excluding hardcopy ASICs, segment orders would have been up 2 percent from last year and up 10 percent sequentially. Revenues of $376 million were up 1 percent from last year despite the lower ASIC business and were up 2 percent sequentially. The segment book-to-bill ratio of 1.12 compares to 1.04 in the first quarter and 1.28 one year ago. The $6 million deterioration in second-quarter operating results compared to last year was caused by costs associated with the continued ramp of FBAR filter and E-pHEMT power module products. At the end of the quarter, the company ended production in the Newark, Calif. fab and closed the facility. Compared to the first quarter, the operating loss was improved by $5 million on additional volume of $9 million.

Life Sciences and Chemical Analysis continued its generally flat business profile, with second-quarter orders of $280 million off 2 percent from last year and up about 4 percent sequentially. Life Sciences orders were down 4 percent from one year ago and up 1 percent sequentially, while orders for chemical analysis were flat year-to-year and up 7 percent from the first quarter. Revenues of $286 million were 5 percent ahead of one year ago and up 4 percent from the first quarter. Because of the seasonality of operating expenses, operating profits were off $14 million sequentially, similar to the quarterly pattern in 2002. Compared to last year, profits were unchanged despite $14 million higher revenues because of increased R&D spending in life sciences and temporarily higher IT expenses associated with the CRM implementation.

About Agilent Technologies
Agilent Technologies Inc. (NYSE: A) is a global technology leader in communications, electronics, life sciences and chemical analysis. The company's 32,000 employees serve customers in more than 110 countries. Agilent had net revenue of $6 billion in fiscal year 2002. Information about Agilent is available on the Web at

More financial information about this quarter's earnings is available at

A telephone replay of the conference call will be available starting at 4:30 p.m. (PT) on May 19 through May 26 by dialing +1 719 457 0820 and entering pass code 468550.

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