Agilent beats, warns

February 20, 2001: 5:27 p.m. ET

Company edges quarterly estimates, sees slower growth

NEW YORK (CNNfn) - Agilent Technologies logged a fiscal first-quarter profit that narrowly beat analysts' expectations Tuesday but warned that the company will not meet its previous revenue-growth targets for the current fiscal year.

The Palo Alto, Calif.-based company said it earned $237 million, or 51 cents per share, during the quarter ended Jan. 31, excluding extraordinary charges.

That compares with a profit of 30 cents per share during the same period a year earlier and is a penny more than the 50 cents per share the Street expected, according to a survey of analysts conducted by earnings tracker First Call.

At $2.8 billion, Agilent's first-quarter revenue rose 26 percent from the same period a year earlier and was in line with what analysts generally had expected, according to the First Call survey.

But the company, a spinoff of Hewlett-Packard that makes test and measurement equipment, semiconductors and chemical analysis tools, also added its name to the growing list of technology outfits that will not meet their previous growth targets.

Ned Barnholt, Agilent's president and chief executive, said the company now expects to post revenue growth between 10 percent and 15 percent in the current fiscal year, which ends in October. When Agilent reported its fiscal fourth-quarter results in November, executives had said they were on track to post annual 20 percent revenue growth.

"There's no doubt that we face some real challenges in the short term," Barnholt told analysts in a teleconference Tuesday evening. "This makes our outlook for the rest of the year particularly uncertain."

He said the company will work to balance the current slowdown with its commitment to long-term growth. Agilent will continue to invest in research and development and evaluate strategic acquisitions and partnerships. But at the same time, it will "keep a tight lid on discretionary expenses," Barnholt said.

The company also will consider further restructuring as part of its efforts to cut costs and maintain profitability, Barnholt said. Since July, Agilent has reduced its total work force by more than 600 and reduced expenses by $10 million, he said.

Agilent also said orders slowed significantly in the first quarter, compared with the same period a year earlier. Total orders rose 4 percent, compared with the 36 percent order growth it reported during the same period last year.

Robert Walker, Agilent's chief financial officer, said orders from the company's healthcare solutions business were soft this quarter. In November, Agilent agreed to sell that business, which makes things like patient vital-signs monitoring equipment and ultrasound-imaging devices, to Philips Electronics for $1.7 billion. The company said it expects to complete that deal in the middle of 2001.

That sale was part of Agilent's broader restructuring plan under which the company is targeting more profitable areas, such as communications and life sciences, while limiting its exposure to areas where there is less potential for growth.

Shares of Agilent (A: Research, Estimates) fell $6 to $44 on the New York Stock Exchange Tuesday.

Accounting for one-time charges, Agilent's net income for the fiscal first-quarter was $154 million, or 34 cents per share, compared with $131 million, or 30 cents per share, during the same period a year earlier.