Agilent levels losses, but 2500 more to lose jobs

Agilent Technologies ended its fiscal year with a break-even fourth quarter that wasn’t pretty, but did set the stage for the company’s return to profitability in 2003--with or without an economic recovery, according to company officials.

After a fourth quarter restructuring charge of $256 million, $92 million in non-cash and goodwill charges and $1.74 billion in revenue, Agilent posted a net GAAP loss of $236 million, or $0.51 per share. This was at the high end of company expectations, but at the low end of a down market for which CEO Ned Barnholt sees limited opportunity for growth. Most of that opportunity will come from places like China, he said.

Although service providers remain cautious about capital expenditures, Agilent saw an increase in orders for its OSS products and Barnholt said the wireless test market remained strong due in large part to handset manufacturing.

Barnholt called the quarter gratifying overall because it showed how far his company has come in terms of offsetting its revenue shortfalls and because, “We were able to balance our short term effort to return to profitability with our long term emphasis on [research and development] and improving cost structure.”

Agilent forecasted earlier this year it would need to cut $1.2 billion out of its cost structure and 8000 workers from its payroll. By the end of the fourth quarter, which ended on October 31st, the company met its goals. However, Agilent’s force reduction program will continue through the next six months as it trims another 2500 jobs.

“We’re not counting on a turnaround to restore Agilent to profitability,” said Adrian Dillon, executive vice president and chief financial officer at Agilent. “We will continue to realize the cumulative effect of our restructuring efforts.”

Dillon said visibility has never been worse; however, he expects the wireline test market to continue downward. “But at a slower pace than this year’s 35% decline in capex,” he added.

Although order cancellations have held steady and are much lower than the quarter-of-a-billion-dollars worth of cancellations the company saw last year, they remain at a staggering $90 million over the last few quarters. Test and measurement orders were up 22% from one year ago and were up 3% sequentially in the fourth quarter.

Agilent expects to take additional restructuring and asset impairment charges of about $20 million next quarter in order to drive its cost structure below $1.6 billion. Through the fourth quarter it stands at $1.65 billion.