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Agilent Technologies Issues
Profit Warning By Chris Coyle Shares of Agilent Technologies (NYSE: A) nosedived after-hours Thursday and continued to dip on Friday after the test and measurement company announced that earnings for its third quarter will come in well below analysts' forecasts. The company, which was spun-off from Hewlett-Packard (NYSE: HWP) earlier this year, said that earnings would come in between 18 and 22 cents a share, well below the 35 cent estimate from analysts surveyed by First Call/Thompson Financial. Agilent's stock price, which had closed at 73 on Thursday, fell 19 to 54 in after-hours trading. The stock fell another 11 percent to 48 1/16 in Friday's trading. The company said parts shortages for their test and measurement products have caused shipments to be delayed. Agilent noted that they are seeing strong demand for their test and measurment and semiconductor products with order growth of 40%. However, the demand can not be satisfied; the company said that in many cases products are sitting in boardrooms and aisles waiting for one or two parts to come in. In a conference call, the company said, "component suppliers, industry-wide, are stretched to their capacity limits and beyond." In defense of Agilent, many other compaies are feeling the wrath of parts shortages, too. Ericsson (NASDAQ: ERICY), IBM (NYSE: IBM), Adaptec (NASDAQ: ADPT), Palm (NASDAQ: PALM), Cisco Systems (NASDAQ: CSCO), and Nintendo have all had problems with parts shortages. The shortage problem doesn't appear to be just short-term in nature, as the company said they expect the supply limitations to be around for at least the next 12 months. Despite this, Agilent still appears confident that they can meet or beat fourth quarter earnings expectations of 39 cents a share. The other factor contributing to this earnigns warning was Agilent's continued weakness in its healthcare-solutions and chemical analysis businesses. The company's healthcare-solutions business is expected to have at least a $30 million operating loss for the third quarter, the same loss reported last quarter. The main culprit is slow sales in its patient-monitoring equipment. The company has taken actions to help this weak division. The company said they are cutting discretionary expenses, as well as putting a hiring freeze in place. However, Agilent believes that revenue and order growth in this business will be slow well into next year, which is why the company is cutting costs in this division wherever possible. The chemical analysis business is not doing much better; it is expected to have a small operating loss for the quarter. On this news, three brokerake firms, Goldman Sachs, Salomon Smith Barney, and Bear Stearns lowered their ratings on Agilent. The troubles for the company may be here for awhile. Last quarter, the young comany posted poor operating earnings which were down 11 percent from the same period a year ago.. The comments company executives have made do leave me with some worries as to the possibiltiy of the company posting poor earnings next quarter, but the executives believe the actions put into motion will improve fourth quarter results. The company will post final results for this quarter on August 17. |
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Copyright © 2000 Chris Coyle (StockChamp). All rights reserved.