AGILENT TECHNOLOGIES INC. $16 - New York symbol A

AGILENT TECHNOLOGIES INC. $16 (New York symbol A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 345.3 million; Market cap: $5.5 billion; Price-to-sales ratio: 0.2; WSSF Rating: Average) makes testing systems that help electronics manufacturers improve the quality of their products. Agilent also makes measurement equipment for medical research labs and drug companies. Demand for Agilent’s medical-related products remains steady, but the recession has hurt sales of cellphones and other electronic devices. As a result, manufacturers are spending less on the company’s testing equipment. In response, Agilent plans to drop some of its businesses and shrink its workforce by 3%. The company expects to pay $100 million in severance and other expenses. But these moves should lower Agilent’s costs by $150 million a year, and let it keep spending 14% of its sales on research. To put these amounts in context, Agilent’s earnings in its first fiscal quarter, which ended January 31, 2009, dropped 47.1%, to $72 million, or $0.20 a share. It earned $136 million, or $0.36 a share a year earlier (these figures exclude restructuring and other charges). Sales fell 16.3%, to $1.2 billion from $1.4 billion. Agilent holds cash of $1.4 billion, or $4.00 a share. The company’s $2.2-billion long-term debt is a reasonable 42% of its market cap. Agilent is a buy.

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