Agilent resorts to layoffs

Try as it might to weather the economic storm through cost containment and salary reductions, Agilent Technologies will resort to cutting about 9% of its workforce over the next 10 months in an effort to return to profitability.

Although loses for the third quarter were smaller than expected—24 cents per share versus a 35 cent projection—the company’s short term outlook forced more extreme measures. “It is a very difficult step to take, but we simply have to size the company to a lower level of business,” said Ned Barnholt, president and CEO at Agilent.

Orders for the quarter were down 54% from one year ago and down 5% from the previous quarter. “Even when you take into account that Q3 (2000) was extremely strong, this is a steep decline,” Barnholt said.

The announced workforce reductions include normal attrition and those affected by some restructuring that occurred in the last quarter. With its normal 7% to 8% attrition rate lowered to 4% to 5% because of the slowed economy, Agilent will be eliminating approximately another 4% to 5% by the middle of next year.

“The downturn is severe and a solid upturn appears distant,” Barnholt said.

Barnholt also said that despite a negative earnings report, the company had a positive cash flow in the quarter. He cited the positive effects of earlier cost-cutting measures, including a 10% salary reduction late last year.

“The 10% cut while it undeniably put financial pressure on our people, also made the need to cut spending much more real across the company,” Barnholt said.

A 70% increase in the use of video-conferencing reduced travel expenses by about $10 million, Barnholt said.