Agilent Technologies, considered the No. 2 manufacturer of microarrays, on Monday reported overall net earnings that represented a $250 million turnaround in the span of a year.
The company, which only months ago was instituting stringent expense management and a third round of layoffs since 2001, had net income of $104 million in its second fiscal quarter ending April 30, compared to a loss of $146 million for the same quarter in 2003. Orders across the four business groups of the Palo Alto, Calif.-based company were up some 24 percent.
“Agilent’s businesses are clearly picking up, with virtually all of our major markets and all geographies gaining momentum,” Ned Barnholt, Agilent chairman, president, and chief executive officer, said in a statement. “Orders and revenue were at their highest levels since early 2001.”
Barnholt said the company was benefiting from an upturn in the market, its research and development investments, and new products. Environmental testing, food safety, and pharmaceutical markets boosted the company’s life sciences group’s revenues, he said.
Orders for its gene-expression platform increased by 29 percent, said Adrian Dillon, the company’s chief financial officer, in Monday’s conference call with financial analysts. (For more detail, see Lab Report, page 6).
While the top line was promising, the bottom line lacked similar results. The company reported total revenues of $1.8 billion for the second quarter, compared to $1.5 billion for the same period in 2003.
“It was a mixed quarter for Agilent,” Dillon said in the call. “Our orders and revenues were at the highest levels in three years, but there is disappointment that we didn’t achieve better profitability on the increased volumes.”
While Agilent does not provide detailed information on its microarray products, the company said that its Life Sciences and Chemical Analysis division, the corporate home for its microarray products, recorded overall orders of $338 million, compared to $280 million for the year-ago quarter, and revenues of $333 million, compared to $286 million for the same period.
Agilent’s 3,700-employee LSCA division sells microarray platforms, microfluidics devices, gas and liquid chromatography instruments, mass spectrometers, software and informatics, as well as consumables, reagents, and services.
Its microfluidics tools include the Agilent 2100 bioanalyzer instrument system, developed in collaboration with Caliper Technologies, which has turned into a must-have tool in microarray laboratories for testing sample quality of RNA.
In its 2003 annual report, the company characterizes the gene expression market it services with microarrays and microfluidics as a double-digit growth market and counts a total of 25,000 customers worldwide. Microarrays, the company said, contributed to a 5 percent growth in revenues for the division in 2003, despite an overall weakness in pharmaceutical industry spending.
The company’s quarter-to-quarter costs were up by some $100 million, Dillon said. Sixty percent of that was expected. Dillon said higher commissions and trade-show costs amounted to a $10 million increase. Some $40 million of the increases were unexpected, he said, coming from a pent-up demand for costs like travel and training, consultants, manufacturing and operating supplies — things postponed from the company’s contractions.
“We have learned that this company has had two speeds, flat-out and dead stop,” Dillon said. “We are learning how to use the throttle to modulate the speed.”
Agilent has initiated three restructuring plans since the beginning of the stock market decline in 2001, with the most recent restructuring announced in the fourth quarter of 2003. In those restructurings, the company has cut its workforce by some 15,000 employees to 29,000 at the end of 2003.
The company ended the quarter with $1.84 billion of cash and equivalents. Agilent spent $237 million on research and development, compared to $296 million in 2003.
Barnholt said the company is optimistic.
“Some are projecting [the business] cycle is at its peak . . . and its downturn is just around the corner,” he said. “We think the cyclical recovery will continue to run, and business levels will run strong at the end of 2004 and into 2005.”