Monday August 19, 8:17 pm Eastern Time
Reuters Business Report
Agilent Posts Loss on Slow Telecoms
By Peter Henderson
SAN FRANCISCO (Reuters) - Electronics and testing equipment maker Agilent Technologies Inc. (NYSE:A - News) on Monday reported a steep quarterly loss, blaming weak sales to long distance telecommunications companies and glitches in a new customer service system. ADVERTISEMENT
The Palo Alto, California-based company said it was slashing prices to keep customers, given the tough economy, and planned modest new cost reductions including some job cuts.
Agilent pulled back from previous forecasts of a current-quarter profit and said, at best, it would break even.
Shares of Agilent, which supplies the chips that run cameras embedded in cell phones and equipment to test the brains of personal computers, slid to $16.18 in after-hours trade after climbing about 9 percent during the regular session to close at $17.44 on the New York Stock Exchange.
Agilent reported a fiscal third-quarter net loss of $228 million, or 49 cents per share, compared with a loss of $225 million, or 49 cents per share, a year earlier.
Before one-time and non-operational items, Agilent lost $143 million, or 31 cents per share, compared with a loss of $101 million, or 22 cents per share, a year earlier.
Revenue fell to $1.39 billion from $1.82 billion a year earlier.
Analysts polled by Thomson First Call on average had expected Agilent to report a loss before items of 15 cents per share on sales of $1.5 billion. Agilent had forecast an operating loss of 10 cents a share to 20 cents a share on sales of $1.5 billion to $1.6 billion.
"People weren't buying the equipment," said Banc of America Securities analyst Mark Fitzgerald, calling results worse than expected. But he said the hard hit stock was a trading buy.
Chief Executive Ned Barnholt said that problems with a new enterprise resources planning (ERP) system had cost Agilent about $105 million in revenue, the difference between hitting and missing its forecast revenue range.
"ERP was clearly the biggest disappointment, but other than that... wire line communications continued to decline. We had expected it to stabilize," he said in a telephone interview, in particular blaming markets for long-distance optical networking, which typically carry data.
"We are dealing with the overhang not just of capacity but of the financial ills of the industry."
S.G. Cowen analyst Richard Chu said that the quarter was disappointing but that Agilent stood to do well when the economy finally turned around, and he recommended the stock.
"I think their underlying product-to-market position is sufficiently strong that we should have confidence in their being able to earn relatively full margins upon business recovery," he said.
For the fourth quarter, Agilent forecast revenue in the range of $1.6 billion to $1.7 billion. Including a 5-cent per share impact from new systems management implementation, it expected operating results between a 10-cent loss and break-even.
"I think it is going to be sometime in the next couple of quarters that we are back to profitability," Barnholt said. The company plans to cut costs by another $50 million per quarter.
Agilent's shares have fallen nearly 40 percent this year, compared with a nearly 30 percent fall by the American Stock Exchange Computer Hardware index (AMEX:^HWI - News). |
