Agilent Technologies Inc (A.N) is cutting 2,700 jobs, or 14 percent of its workforce, and suspending share buybacks due to a steep fall in revenue and “no prospects for a meaningful recovery in the foreseeable future.”
Chief Financial Officer Adrian Dillon told Reuters in an interview that while the maker of electronic testing equipment and bio-analytical measurement equipment would stay profitable, it is bracing for a multiyear slump.
“We don’t expect (demand) to come back any time soon, so we’ve got to fundamentally change the cost structure,” he said. Referring to revenue levels, he added, “We will not see a 2008 level of activity at least for two to four years.”
But Agilent’s shares rose more than 5 percent after the company said that while the restructuring would cost $160 million, it would cut annual costs by $310 million.
It expects the bulk of the cuts to come from its electronic measurement business, and an additional $10 million in savings to come from its semiconductor and board test segment.
Agilent did not give a total revenue estimate but said it expects to report a 12 percent operating margin on revenue of $2.3 billion for its electronic measurement business, which represented 56 percent of its 2008 revenue.
This would represent a 30 percent fall from 2008 revenue for that segment, and likely means the company will not meet average analyst estimates for total revenue of $4.6 billion for the fiscal year ending in October, Dillon said.
Agilent also warned that revenue in its semiconductor and board test segment, its smallest unit, would fall more than 50 percent from last year and 65 percent from its peak.
Dillon did not give specific estimates for Agilent’s bio-analytical business, which has been its fastest-growing unit and represented 38 percent of 2008 revenue. But he was comfortable with analyst estimates for a decline this year in the 5 to 10 percent range.
The CFO also said Agilent “wouldn’t be shy” if an acquisition opportunity arose but it was not clear to him that Agilent “needs to do acquisitions.” The company has made about $700 million in acquisitions in about four years.
Agilent has roughly $750 million in cash. It had spent about $125 million of its $1 billion share authorization for 2009 before suspending its buyback program.
Agilent had a two-year buyback authorization of $2 billion, with $1 billion expected to be carried out each year.
Its shares were up 80 cents at $16.76 on New York Stock Exchange on Thursday morning.