What is the updated financial outlook for Keysight in the second quarter of fiscal year 2017?

Keysight now expects Q2 FY17 revenue to be in the range of $725 million to $745 million, a slight downward adjustment from the previous guidance of $720 million to $760 million. Non-GAAP earnings per share are now anticipated to be between $0.55 and $0.63, compared to the prior guidance of $0.54 to $0.68.

What factors are influencing Keysight's Q2 FY17 guidance?

The updated guidance reflects continued strength across most end markets. However, the company noted a slowdown in the aerospace, defense, and government sectors due to delays in U.S. government spending caused by continuing Congressional budget resolutions.

What are the main risks associated with the pending Ixia acquisition disclosed in this filing?

The primary risk highlighted is the existence of three shareholder lawsuits filed against both Ixia and Keysight. These lawsuits aim to prevent or delay the merger and could lead to significant legal expenses, potential monetary damages, or ultimately prevent the acquisition from being consummated.

Why does Keysight not provide a GAAP reconciliation for its non-GAAP EPS guidance?

Keysight states that it is not currently possible to provide a reasonable estimate of future GAAP tax rates due to the exclusion of certain tax benefits or expenses not directly related to ongoing operations, and the inherent unpredictability of these items. This also limits their ability to provide a reconciliation to GAAP amounts for the projected Q2 FY17 non-GAAP EPS.

KEYS 8-K: Regulation FD

Summary

Keysight Technologies, Inc. (KEYS) filed an 8-K on March 20, 2017, to update its financial outlook for the second fiscal quarter of 2017 and to disclose risk factors associated with its pending acquisition of Ixia. The company revised its revenue guidance downwards to a range of $725 million to $745 million from a previous range of $720 million to $760 million. Non-GAAP earnings per share are now expected to be between $0.55 and $0.63, a slight adjustment from the prior guidance of $0.54 to $0.68. This recalibration reflects continued strength in most end markets, offset by delays in U.S. government spending due to Congressional budget resolutions impacting the aerospace, defense, and government sectors. A significant portion of the filing addresses potential legal challenges to the Ixia acquisition. Several lawsuits have been filed by Ixia shareholders seeking to enjoin or rescind the merger. These legal actions pose a risk of delaying or preventing the consummation of the acquisition, and could result in monetary damages, fees, and significant defense costs for Keysight. The company also reiterated its standard forward-looking statement disclaimers, emphasizing that actual results may differ materially from projections due to various business, economic, and competitive uncertainties, particularly in light of limited market visibility and the recent change in U.S. government administration.

Key Highlights

1Keysight has narrowed its Q2 FY17 revenue guidance to $725-$745 million, a slight downward revision from the previous $720-$760 million range.
2Non-GAAP EPS guidance for Q2 FY17 is now projected at $0.55-$0.63, a slight adjustment from $0.54-$0.68.
3The company cited continued strength in most end markets, but noted softness in aerospace, defense, and government sectors due to U.S. budget delays.
4Three shareholder lawsuits have been filed against Ixia and Keysight challenging the pending acquisition of Ixia.
5These lawsuits seek to prevent or delay the merger and could result in significant costs or prevent the deal from closing.
6The filing includes unaudited pro forma condensed combined financial data related to the Ixia acquisition, as well as Ixia's financial statements and controls information.

Keysight Technologies, Inc. 8-K Report, Regulation FD Disclosure (Mar 20, 2017)

Summary

Key Highlights

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