Agilent Technologies Expects Third-quarter Earnings to Fall Short of Expectations
PALO ALTO, Calif.--(BUSINESS WIRE)--July 20, 2000--
Parts Shortages Hamper Shipments; Healthcare Solutions, Chemical Analysis Businesses Continue Weak
Agilent Technologies Inc. (NYSE:A) today said it expects earnings to fall short of the consensus estimate of 35 cents per share for the company's third quarter, which ends July 31, 2000. Agilent will announce complete third-quarter results on August 17, 2000.
The company said demand for its products and services in the communications marketplace continues to be extremely strong. This demand is fueling excellent overall order growth in the company's test-and-measurement and semiconductor-products businesses. Capacity constraints and parts shortages, however, are preventing Agilent from ramping shipments as fast as incoming orders. Because of parts shortages in the test-and-measurement business, the company said it is falling short of its revenue and profit plan, particularly for RF and microwave products.
Continued weakness in the healthcare-solutions business as well as softness in chemical analysis are also contributing to the anticipated shortfall.
Agilent said it now expects earnings per share (EPS) for the quarter to be between 18 and 22 cents on a basic and diluted basis. This compares with EPS of 36 cents on a basic and diluted basis in the same quarter last year and 37 cents and 36 cents, respectively, in the prior quarter. Earnings across the company this year are impacted by the planned costs of operating independently. Basic earnings per share are calculated using weighted average shares outstanding. Diluted earnings per share also include the dilutive impact of outstanding Agilent options.
"We're very frustrated because we're not fully satisfying the unprecedented demand in our communications businesses," said Edward W. (Ned) Barnholt, president and chief executive officer of Agilent. "People throughout the organization are working very hard to ramp shipments, but with less than two weeks left in the quarter and the difficulties in obtaining critical parts, it's clear that revenue will come in below plan."
The company said demand in the healthcare-solutions business remains weak, particularly in the U.S. patient-monitoring market. New products in cardiology imaging are slightly offsetting this weakness. The healthcare-solutions business is likely to post an operating loss for the quarter that is at least equal to last quarter's operating loss of $30 million.
"Results in our healthcare business are simply unacceptable," said Robert R. (Bob) Walker, executive vice president and chief financial officer. "Overall market demand continues weaker than we anticipated, and we're not expecting near-term improvement in market conditions. While we've taken some actions already, it's clear that additional actions are required, and we'll be making announcements in this area in the next few weeks."
The company said growth in its chemical-analysis business is below expectations, and that the business is likely to post a modest operating loss for the full quarter. Agilent's core business in this segment is running below plan, but the company continues to be encouraged by the initial demand for its new bioscience products.
"Overall, this quarter's results are very disappointing," said Walker. "As a result of the initiatives we have underway to increase our shipments and to balance expenses with revenue, we expect our results will improve in the fourth quarter. At this point, we feel comfortable with the consensus estimates of 39 cents for our fourth quarter, and we think there may be some upside potential depending on parts availability."
About Agilent Technologies
Agilent Technologies, Inc. (NYSE:A) is a diversified technology company, resulting from Hewlett-Packard Company's plan to strategically realign itself into two fully independent companies. With approximately 43,000 employees serving customers in more than 120 countries, Agilent Technologies is a global leader in designing and manufacturing test, measurement and monitoring instruments, systems and solutions, and semiconductor and optical components. The company serves markets that include communications, electronics, life sciences and healthcare. In fiscal year 1999, the businesses comprising Agilent, then a subsidiary of HP, had net revenue of more than $8.3 billion.
Information about Agilent Technologies can be found on the Web at www.agilent.com.
This news release contains forward-looking statements (including, without limitation, information regarding projected net revenue, operating income and losses, net margin, net earnings, and anticipated costs and expenses) that involve risks and uncertainties that could cause the results of Agilent Technologies to differ materially from management's current expectations. These risks include the ability of Agilent to successfully operate as an independent company, including the ability to manage expenses, and to retain and motivate key employees in a very competitive technology labor market.
In addition, other risks that Agilent faces in running its operations include: parts shortages, the timely ability to ramp manufacturing capacity to meet order demand; the timely innovation, production, commercialization and acceptance of new products and services; the economic, political and other risks associated with international sales and operations; the cyclical nature or unpredictable weaknesses in some of the industries and markets into which Agilent sells its products; the potential for experiencing increased costs resulting from decreased purchasing power as a separate company from HP; the current use of information systems and transitional services provided to Agilent by HP, which Agilent must develop and procure on its own in the near term, potentially at increased costs; and other risks detailed in Agilent's Annual Report on Form 10-K for the year ended October 31, 1999, and its Quarterly Report on Form 10-Q for the quarter ended April 30, 2000, as filed with the Securities and Exchange Commission.
CONTACT:
Agilent Technologies Inc.
Steve Beitler, 650/752-5246
steve-beitler@agilent.com
Mary Lou Simmermacher, 650/752-5283
marylou-simmermacher@agilent.com
Hilliard Terry, 650/752-5329 (Analyst)
hilliard-terry@agilent.com |
