Agilent Cuts 2700 Jobs, Restructures Electronic Measurement Business

Agilent Technologies Inc has announced a 2700 employee layoff and a major restructuring of its electronic measurement business in response to what the company described as the "most severe global downturn" in its history.

In doing so, Agilent warned that its electronic measurement (EM) segment's fiscal 2009 (ending October 31) revenue is expected to be down roughly 30 percent from fiscal 2008, falling to the lowest level in the company's 10 year history. Agilent further said that revenue in its semiconductor and board test (SBT) segment is expected to be down more than 50 percent from fiscal 2008 and off 65 percent from its peak volume.

Foreshadowing the announcement were the company's fiscal Q1 2009 results, announced in mid February. For the quarter ended January 31, Agilent reported EM revenue of $596 million, down 23 percent year over year, and SBT revenue of $45 million, down 49 percent year over year.

"We have been very aggressive to date in addressing the downturn in electronic measurement markets," said Bill Sullivan, President and CEO of the Santa Clara, Calif-based company, in a statement. "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 EM business 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 return on invested capital at annualized revenues of $2.3 billion.

Agilent also announced a further restructuring of its SBT unit to reduce annual costs by an additional $10 million. In February, Agilent had announced it was exiting the automated optical inspection and automated x-ray inspection product lines of the SBT segment.

The restructuring will affect approximately 2,700 employees and have a cash cost of about $160 million, Agilent said.

"For Agilent to realize its full potential, we must have a financially healthy company and a solidly profitable electronic measurement business," Sullivan said. "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."

The company also announced that it is temporarily suspending its share repurchase program until the end of its current fiscal year. Agilent said doing so will help it fully fund the restructuring and conserve cash.

Agilent's announcement comes after fellow test and measurement industry player Teradyne Inc announced unspecified cuts intended to bring its total planned 2009 cost reductions to approximately $190 million. Keithley Instruments Inc also announced cuts in February, discontinuing product lines and saying it would trim 6 percent of its headcount.

Electronic News, a sister publication of EM Asia