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Scientific testing equipment company lays off 1300 Original Source Link: (May no longer be active)
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Agilent to Cut 1,300 Jobs, Sell Semiconductor Unit (Update2)
Aug. 15 (Bloomberg) -- Agilent Technologies Inc., the world's biggest maker of scientific-testing equipment, will cut 1,300 jobs, sell its semiconductor unit, spin off a chip-testing business and buy back $4 billion of stock to bolster its stock price and profit.
Kohlberg Kravis Roberts & Co. and Silver Lake Partners will buy the semiconductor business for $2.66 billion, Palo Alto, California-based Agilent said today in a statement.
The moves free Agilent from swings in the chip industry, where sales are unpredictable as companies rush to add capacity to meet demand and then are forced to quickly scale back as inventory piles up. Chief Executive William Sullivan this year said the semiconductor unit was half as profitable as it should be, and the chip-testing business today posted a quarterly loss.
``The company has to get refocused,'' Mark FitzGerald, an analyst at Banc of America Securities, said before the report. Fitzgerald, based in San Francisco, rates Agilent ``sell.'' A sale of the semiconductor business ``gives them a pot of money which they can use to go out and do acquisitions.''
The company's third-quarter net income increased 4 percent to $104 million, or 21 cents a share, from $100 million, or 20 cents a year earlier. Sales fell 10 percent to $1.69 billion, Agilent said today in a separate statement.
Excluding some items, profit would have been 28 cents a share. Agilent was expected to report a profit of 26 cents, according to the average of nine analyst estimates in a survey by Thomson Financial. Sales were predicted to be $1.74 billion.
Shares of Agilent, which was spun off from Hewlett-Packard Co. in 1999 and 2000, rose 29 cents to $26.41 in New York Stock Exchange composite trading Aug. 12. They have risen 29 percent in the past year.
`Extremely Volatile'
Agilent also agreed to sell its stake in Lumileds Lighting Int. BV for about $950 million to Royal Philips Electronics NV, the world's largest maker of light bulbs. Agilent had owned 47 percent of Lumileds, the world's largest maker of high-power LEDs, or light emitting diodes.
The company said it will buy back its $1.15 billion in convertible debt due in 2021, a move that would eliminate Agilent's only long-term debt and reduce shares outstanding by 36 million.
The job cuts include the workers in the divested units, and the moves will cost $200 million. The company has 28,000 workers.
Agilent's chip business has ``been extremely volatile for them in terms of profitability,'' said Terry Daniels, an analyst at Edward Jones & Co. in Des Peres, Missouri, who rates the stock ``hold'' and said he doesn't own it.
By the Numbers
Menlo Park, California-based Silver Lake Partners specializes in technology investments. It teamed with New York-based Kohlberg Kravis Roberts and other companies in the $11.3 billion buyout of SunGard Data Systems Inc., approved by shareholders last month.
The sale will close by Oct. 31, Agilent said. The company expects to complete the chip-testing unit's divestiture ``as soon as practical in 2006,'' according to the statement.
Agilent machines test electronics such as cell phones. The company also makes machines used in the chemical, pharmaceutical and oil industries to test chemicals.
The chip unit is Agilent's second-largest behind test and measurement. Semiconductor revenue fell 1.8 percent to $450 million in the quarter. Operating profit fell to $39 million.
Sales in the business that currently includes chip-testing equipment fell 21 percent to $192 million, and the unit posted a $13 million loss in the quarter.
Revenue in Agilent's test and measurement business decreased by 7.6 percent to $705 million. Sales in the life sciences and chemical analysis business rose 1.8 percent.
The company in February sold part of the division that made camera chips for mobile phones to Flextronics International Ltd. Sullivan said in the interview last month he may close or sell part of the chip business to boost the company's profitability.
Agilent reiterated that profit this quarter will be 33 cents to 38 cents a share on sales of $1.79 billion to $1.89 billion. Analysts expected profit of 34 cents and sales of $1.85 billion, according to Thomson Financial.
Last Updated: August 15, 2005 07:36 EDT
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