10-QPeriod: Q2 FY2005

AGILENT TECHNOLOGIES, INC. Quarterly Report for Q2 Ended Apr 30, 2005

Filed June 6, 2005For Securities:A

Summary

Agilent Technologies reported a decrease in net revenue for the second quarter of fiscal year 2005 compared to the prior year, primarily driven by weakness in semiconductor-related markets and the wireless handset sector. While overall revenue declined 8% year-over-year, there was sequential revenue growth of 2%, signaling a potential stabilization. Net income also saw a decrease compared to the prior year's second quarter, though it increased for the first six months of the fiscal year. The company's financial position remains strong, with a significant increase in cash and cash equivalents and positive operating cash flow. Agilent is actively managing its business segments, implementing structural and operational changes in its automated test and semiconductor products businesses to address market challenges. This includes consolidation and relocation of operations to Asia to achieve greater efficiencies. The Test and Measurement segment showed positive growth in orders and revenue, while the Life Sciences and Chemical Analysis segment also performed well. Investors should monitor the recovery in the semiconductor markets and the effectiveness of Agilent's strategic initiatives in its challenged segments.

Key Highlights

  • 1Total net revenue for the three months ended April 30, 2005 was $1.69 billion, an 8% decrease year-over-year, but a 2% increase sequentially.
  • 2Net income for the quarter was $95 million ($0.19 per diluted share), down from $104 million ($0.21 per diluted share) in the prior year's quarter.
  • 3The company generated $342 million in operating cash flow for the six months ended April 30, 2005, and ended the period with $2.7 billion in cash and cash equivalents.
  • 4Weakness in semiconductor-related markets and the wireless handset market significantly impacted revenue, particularly in the Semiconductor Products and Automated Test segments.
  • 5The Test and Measurement segment experienced revenue growth of 7% year-over-year, driven by demand for communications test solutions and new product acceptance.
  • 6The Life Sciences and Chemical Analysis segment reported revenue growth of 3% year-over-year, with strong order growth indicating future potential.
  • 7Agilent is undertaking structural and operational changes in its challenged segments, including relocating operations to Asia for efficiency.

Frequently Asked Questions

The primary drivers for the revenue decline were weakness in the semiconductor-related markets and softness in the wireless handset market. These factors particularly impacted the Semiconductor Products and Automated Test segments.

Agilent is implementing structural and operational changes, including combining divisions for greater efficiencies, and relocating management, R&D, and manufacturing to Asia. They have also divested their camera module business.

Agilent's cash and cash equivalents increased to $2.7 billion as of April 30, 2005. The company generated strong operating cash flow and believes its current cash and financing capabilities are sufficient to meet its needs for the next twelve months.

The Test and Measurement segment showed positive year-over-year growth in orders and revenue, driven by communications test solutions and new product adoption. The Life Sciences and Chemical Analysis segment also experienced strong order growth and is expected to see continued stable revenue growth.