Agilent cuts pay, warns on revenue outlook

PALO ALTO: Network testing equipment maker Agilent Technologies Inc.

announced a 10 per cent temporary pay cut on Thursday, saying business was worse

than expected and sales were faltering in the current second fiscal quarter.

Agilent, which lowered its forecast for earnings growth for the fiscal year in

late February, said orders from major customers had dropped dramatically in the

last 4 to 6 weeks and it could no longer make a meaningful estimate for the

year.

"While we knew that our second quarter would be especially challenging,

the downturn is more severe than we had anticipated," said Ned Barnholt,

president and chief executive of the company, which is a major supplier to

telecommunications and other technology sector firms.

"We view the economic slowdown as a business cycle - even though it's

deepening and broadening," he added. "We're trying to avoid

across-the-board layoffs," Barnholt said. But Agilent was reducing

production to match orders and temporarily could close some factories, the

company said.

Revenue for the current second fiscal quarter ending April 30 would be less

than $2.9 billion, it said in a statement. On Feb. 20, Agilent had said it

expected sales for the fiscal year to rise about 10 per cent to 15 per cent,

instead of the 19 per cent analysts had expected previously. First quarter

revenue was $2.8 billion.

"The dramatic change in orders will obviously have a negative impact on

our second-quarter results," Barnholt said in the Thursday statement.

Shares of Agilent had closed up $2.53, or 9 per cent, at $30.62 on the New York

Stock Exchange before the announcement.

The pay reduction, which goes into effect for most employees of Agilent's

48,000 work force on May 1, will last through the third fiscal quarter and could

be extended into the fourth, said Agilent, which spun off from computer and

printer maker Hewlett-Packard Co. last year.

The pay reductions would save about $70 million per quarter, Agilent said.

The company also planned to save money by not replacing employees who left or

retired, significantly reducing the use of temporary workers and consultants,

dramatically reducing discretionary spending, such as on new office equipment,

and limiting travel.

(C) Reuters Limited 2001.