Dramatically narrowing its corporate focus, Agilent Technologies is shedding its chip unit and spinning off other assets as it concentrates...
SAN JOSE, Calif. — Dramatically narrowing its corporate focus, Agilent Technologies is shedding its chip unit and spinning off other assets as it concentrates on the test-and-measurement business at its historic core.
About 1,300 jobs will be cut in the reorganization, which will take the company back to roots that extend to the earliest days of its former parent, Hewlett-Packard. Agilent was spun off from HP in 2000.
“It’s been true since the inception of the company, we’ve performed more like a sluggish semiconductor company than the world’s premier measurement company,” Adrian Dillon, Agilent’s chief financial officer, said yesterday. “It has been a case of the semiconductor tail wagging the measurement dog.”
Shares of Agilent soared $3.92, or 15 percent, to close at $30.33 yesterday.
Most Read Stories
- I didn’t get it right with Seahawks’ Michael Bennett, and I apologize
- Seahawk legend Cortez Kennedy dead at 48
- What drivers can and cannot do under Washington state's new distracted-driving law
- Family of girl snatched by sea lion lambasted for ‘reckless behavior’ WATCH
- What was that glowing orb that Trump touched in Saudi Arabia?
Agilent is selling its semiconductor business to buyout firms Kohlberg Kravis Roberts and Silver Lake Partners for $2.66 billion. The division builds chips for a range of products, from mobile phones and computer mice to optical networking gear.
Agilent also agreed to sell its 47 percent stake in San Jose, Calif.-based lighting company Lumileds to Royal Philips Electronics for $950 million and repayment of $50 million in debt.
Lumileds had sales of $324 million and operating profit of $83 million during the past 12 months, Philips said.
Agilent also plans to spin off its system-on-a-chip and memory-test businesses in 2006.
“Today starts a new chapter of Agilent,” said Bill Sullivan, the company’s chief executive. “We have made decisions today for us to be able to focus on our core that we have been a leader in for the last 65 years.”
Agilent said the job cuts — about 4.6 percent of its 28,000 employees — will be made through transfers to the divested businesses, attrition and layoffs.
Agilent’s core test-and-measurement business sells gear that scientists, doctors and electronics engineers use to make precise measurements for complex analyses. The company says 70 percent of all cellphones are tested on Agilent equipment.
Not only is that business healthy, but it is also less volatile than the segments Agilent is exiting, said Richard Chu, an analyst at SG Cowen.
“The overwhelming argument they can make is, the presence of these other businesses diluted their value,” Chu said.
Agilent’s roots predate its independence by decades. In fact, some argue that its test-and-measurement business is more in line than today’s HP with the goals William Hewlett and David Packard had when they launched their seminal Silicon Valley company in a Palo Alto garage in 1939.
When HP announced its intent to spin off Agilent in 1999, Agilent seemed poised for success. Its initial public offering raised $2.1 billion and set Silicon Valley records.
But the tech downturn hit hard, and Agilent undertook several rounds of layoffs — totaling 12,000 jobs — in its quest to become profitable.
It lost a total $3.1 billion in fiscal years 2002 and 2003 before rebounding with a profit of $349 million in fiscal 2004.
Agilent’s latest results, also announced yesterday, show the company is continuing to post profits.
Fiscal third-quarter profit rose to $104 million, or 21 cents a share, from $100 million, or 20 cents a share, a year earlier. Excluding charges, tax benefits and other one-time items, the company earned $142 million, or 28 cents a share, down from $154 million, or 30 cents a share, last year.
Analysts expected 26 cents a share on revenue of $1.74 billion, a survey by Thomson First Call said.