Agilent Technologies Restructures Electronic Measurement Businesses
* Electronic Measurement (EM) businesses to be resized in response to sustained 30% reduction in global demand
* Restructuring of Electronic Measurement to reduce Segment annual breakeven (B/E) cost structure by $300 million, and achieve 12% operating margin(1) and 21% ROIC(2) at an annual revenue of $2.3 billion
* Semiconductor & Board Test Segment further restructured to lower B/E by $10 million
* Total headcount reductions of 2,700 and cash costs of $160 million
* Savings to be achieved ratably over next four quarters
* Share repurchase program temporarily suspended until 2009 fiscal year-end
SANTA CLARA, Calif.- Agilent Technologies Inc. (NYSE: A) today announced a major restructuring of its Electronic Measurement businesses in response to the most severe global downturn in the company’s history. Fiscal 2009 revenue in the company’s Electronic Measurement Segment is expected to be down roughly 30 percent from 2008 to the lowest level in the company’s 10-year history. Revenue in the Semiconductor & Board Test Segment is expected to be down over 50 percent from last year and off 65 percent from its peak volume.
“We have been very aggressive to date in addressing the downturn in electronic measurement markets,” said Bill Sullivan, Agilent president and chief executive officer. “However, business remains severely depressed, and there are no prospects for a meaningful recovery in the foreseeable future. Therefore, we have no choice but to resize our electronic measurement businesses for the realities of the marketplace.”
The company announced it would reduce costs in its Electronic Measurement Segment by an annualized $300 million over the course of the next four quarters, sizing the Segment to achieve a 12 percent operating margin and a 21 percent ROIC at annualized revenues of $2.3 billion. It also announced a further restructuring of its Semiconductor & Board Test Segment to reduce annual costs by an additional $10 million. This restructuring will affect approximately 2,700 employees and have a cash cost of about $160 million.
Said Sullivan, “For Agilent to realize its full potential, we must have a financially healthy company and a solidly profitable Electronic Measurement business. We will move quickly to resize the EM businesses to the new business levels, align resources to the best market opportunities, and position the company for the new economic environment.”
In order to fully fund the restructuring and conserve cash in an environment of severely constrained financial markets, the company also announced it was temporarily suspending its share repurchase program until the end of its 2009 fiscal year.
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