Incorporated: 1999
NAIC: 334413 Semiconductor and Related Device Manufacturing; 334290 Other Communications Equipment Manufacturing; 334513 Instruments and Related Products Manufacturing for Measuring, Displaying, and Controlling Industrial Process Variables
SIC: 3674 Semiconductors & Related Devices; 3669 Communications Equipment Nec; 3823 Process Control Instruments
Agilent Technologies Inc. is the world's leading supplier of electronic test and measurement equipment. Its life sciences and chemical analysis unit manufactures laboratory equipment and other scientific instruments. It serves customers in more than 110 countries, including such global giants as Cisco, Dow Chemical, GlaxoSmithKline, Intel, Merck, and Samsung.
Spin Off from Hewlett-Packard: 1999
In March 1999, Hewlett-Packard (HP), originally founded in 1938 by Stanford University-trained electrical engineers Dave Packard and Bill Hewlett, announced a strategic realignment that would allow it to concentrate on its computer, printing, and software businesses. Hewlett-Packard would continue as a computing and imaging company and include all of HP's computing, printing, and imaging businesses, while Agilent Technologies Inc. would consist of HP's Test and Measurement, Semiconductor Products, Life Sciences, and Chemical Analysis divisions. In November 1999, Agilent Technologies, its name a combination of "agile" and the technological-sounding "ent," began business as a company with $8 billion in sales, or about 15 percent of HP's annual revenue.
In the area of testing and measurement, Agilent provided companies in the communications, electronics, semiconductor, and related industries with standard and customized test and measurement solutions. In the field of semiconductors, it was a supplier of semiconductor components, modules, and assemblies for high-performance communications infrastructure, computing devices, and mobile information appliances. Agilent's healthcare solutions were focused on electro-medical clinical measurement and diagnostic solutions. Its chemical analysis business provided analytical instrument systems that enabled customers to identify, quantify, analyze, and test the properties of substances and products down to the atomic level.
Agilent began business with about 43,000 employees, approximately one-third of HP's workforce. It also took with it about one-third of HP's Laboratories, which it renamed Agilent Technologies Laboratories. At its helm was Edward W. Barnholt as president and CEO. Barnholt, known to employees as Ned, frequently invoked the company's connection to HP. He saw the new company as heir to Hewlett and Packard's vision, true keepers of the "HP way," as described in the 1995 book The HP Way; HP was an organization based upon "participatory management," one in which workers gave their best toward a common purpose in return for being treated honestly and listened to. To this model Barnholt added three values: speed, accountability, and focus. He instituted a pay-for-performance plan for managers and retrained all 6,000 of them to make better and faster decisions.
Barnholt defined the company's vision, direction, and strategy; recruited a management team; and convinced financial analysts to purchase stock. Agilent held its initial public offering (IPO) on November 18, 1999, selling approximately 65 million shares, or 15 percent of Agilent's stock, at $30 a piece. HP retained the other 85 percent. It distributed the remaining shares of Agilent stock to HP shareholders in June 2000, which made Agilent a fully independent company. Wall Street reacted favorably to the IPO, sending the stock up from its initial offering price of $30 a share to $42.44 on the first day. By year's end, that price had reached $79.25 as the market realized that Agilent's future was tied to the growth of the communications industry, specifically to the Internet, and that networks and devices were going to require more and more test equipment.
2000: An Independent Company
Throughout 2000, Agilent introduced new products and hustled to meet orders. It also added manufacturing capacity in communications to address the strong demand for its products in those areas. By November 2000, Agilent employed 47,000 people. Its Semiconductor Products Group carved out a position for itself as one of the few chip makers to achieve strong growth in its communications and life sciences businesses. The life sciences business, part of its Chemical Analysis Group, grew about 20 percent. By 2001, 90 percent of Agilent's $2.2 billion semiconductor revenue derived from its communications segment.
However, falling orders for healthcare products during fiscal 2000 led to the layoff of about 650 workers in Agilent's Healthcare Solutions Group, and toward the end of the year, the company announced that it would sell its healthcare products business to Royal Philips Electronics N.V. for about $1.7 billion. Agilent also sold its Automation Integration Software (AIS) business to Verano. The strategy of selling its unprofitable businesses enabled it to focus on the faster-growing markets for communications and measurement equipment.
For the fiscal year ending October 31, 2000, Agilent's sales of communications test equipment rose 55 percent, making it the company's fastest-growing business. Companies such as Cisco Systems Inc. and AT&T Corp. used Agilent products to test their communications network equipment, and the company formed a key partnership with wireless chip maker Qualcomm Inc., which included the incorporation of Agilent's RFIC (radio frequency integrated circuit) test equipment with Qualcomm's RF chips. Other alliances existed with Alcatel, Rosetta Inpharmatics Inc., PE Biosystems Group, Xilinx Inc., American Healthways, STMicroelectronics, Extended Systems Inc., and Adeptec Inc.
Agilent also engaged in a series of acquisitions throughout 2000 to complement and stretch its various businesses. These included the Silicon Valley Networking Lab, Inc., which provided a range of testing services and products to network equipment manufacturers, communications service providers, and system integrators; J&W Scientific, which became part of its chemical analysis business; American Holographic Inc., a manufacturer of holographic diffraction gratings and spectral sensor modules; Zymed Inc., a provider of cardiac analysis solutions; SAFCO Technologies, a subsidiary of Salient 3 Communications Inc. and a supplier of planning, measurement, analysis, and predictive software systems for the wireless industry; and the eCamera business unit of PhotoAccess.com Corp. Agilent also acquired Digital Technology Inc., a developer of network-protocol test solutions, and Objective Systems Integrators, whose communications test software helped Internet sites and e-commerce systems provide more reliable service.
2001-02: Dealing with a Downturn
Then came 2001 and, despite $10.8 billion in revenues, problems. Hammered by the ailing economy and the downfall in the telecoms (once the big buyers of chips, electronic components, and testing and measurement devices), Agilent's orders were down 40 to 60 percent for the year. Early in 2001, employees and executive level managers agreed to a 10 percent cut in pay until October, but in August the company had to face the fact that it had overhired from 1999 to 2000. It laid off 4,000 employees that summer and another 4,000 in December. In early 2003 another 4,000 workers were let go.
The company dealt with letting its people go "the HP way." It peppered employees with information and enlisted them in the effort to cut costs. It sent its managers to workshops to learn how to lay people off with honesty, an open door, and a willingness to answer questions. Barnholt was honest about the mistakes his company had made and his intention not to make them a second time around. "I think we did overhire, like most companies, back in the 1999-2000 time frame, and we need to recognize that we are in a cyclical business," he confessed in a 2002 Northern Colorado Business Report. Barnholt also said that his company had to be careful about rehiring as things turned around. "My goal is that as we do hire, we will look first to the people who left." In spite, or perhaps, because of its track record with layoffs, the company made Fortune magazine's "Most Admired Companies" list in 2002.
Agilent also canceled some research and development and marketing and sales activities and outsourced some of its manufacturing as part of its cutbacks. Throughout most of 2002, business remained flat while the communications market remained weak and the optical test market, which accounted for anywhere from 25 to 10 percent of Agilent's business, was a long way from recovering. Revenues dropped to $8.4 billion. The company's response was to accelerate its semiconductor product development and to switch its research and development efforts to close-to-market areas.
Agilent also began to focus its expansion efforts on China. Narrowing its strategic focus, it launched a joint venture with Shanghai Precision and Scientific Instrumentation Co., called Agilent Technologies Shanghai Co. Ltd., in 2002 to provide a software application development center for all of Agilent's business groups, including communications and semiconductor industries. In 2003, Agilent also collaborated with the China Integrated Circuit Design Center to establish Beijing's first system-on-a-chip engineering testing center.
2003-07: Focusing on Electronic Measurement
Despite such realignment, in early 2003, Agilent was still posting losses. Revenues dropped again to $6 billion for the year, and the company cut its workforce by 4,000 for a third time and closed a manufacturing plant. Hoping to create new opportunities, it went after the camera-in-a-cell-phone market with a new family of camera module products called sensors that could record and transmit a photographic image over a cellular phone network. That spring, in a surprising move, it put itself in competition with IBM Microelectronics and Fujitsu; as design opportunities for single-use chips were declining, it began shopping its ASIC (application-specific integrated circuit) sockets to large original equipment manufacturers. Also in 2003, Agilent partnered with Anite Technologies to develop test solutions for wireless device manufacturers and network operators.
Despite a 30 percent decline in revenues to $7.2 billion in 2004, Agilent returned to profitability after three years of losses. Still a market leader in almost all optical test segments from lab to field, it commanded the largest optical test market share overall. The company began to aggressively market its trade-up programs for next-generation products among customers. The 2004 surge in cellphone popularity, primarily in the area of cellphone gaming, was good news for Agilent, whose test sets were used to test 70 percent of the wireless phones produced worldwide. As the number of application makers increased dramatically with the increase in games, services, and video and phone products, manufacturers required the test sets to confirm how well their components received or transmitted data at different speeds and frequencies, as well as how well a device captured a network signal as it moved farther from a cell tower.
Agilent also developed a comprehensive infrared hardware and software platform in 2004 and then partnered with Link Evolution Corp., a wireless communications software development company, to collaborate on developing an infrared financial messaging-compliant smart solution for the Japanese infrared mobile payment market. In a separate partnership, it targeted the automotive mobile phone and lighting markets with Lumileds Lighting to develop new light-emitting diodes that same year.
The following year, China's growing market continued to attract Agilent's attention and investment dollars. It formed Agilent Technologies China Holding Co. to consolidate its China-based enterprises and a joint venture with Qianfeng Electronics Corporation as a first step toward introducing its third-generation wireless telecom technology there. At home, Agilent partnered with Asylum Research to collaborate on technologies and applications in the area of nanotechnology measurements. It acquired Molecular Imaging, manufacturer of nanotechnology-measurement tools, such as modular atomic force microscopes.
Consolidating and Reorganizing for the 21st Century
In 2005, Agilent was the world's largest electronic measurement company with about 20,000 employees internationally and about $5.1 billion in revenue. Like many other tech firms, however, Agilent was still engaged in a long process of reassessment after the tech bubble burst in 2000. Although initially slow in making changes, Agilent's efforts were surpassing those being made by the rest of the industry by 2005. Still Sonoma County's largest high-tech employer despite four years of downsizing, Agilent cut back further in 2005, divesting itself of its nonprimary businesses to focus on its growing measurement business. It sold its Semiconductor Products Group to Kohlberg Kravis Roberts & Co. and Silver Lake Partners for $2.7 billion and announced it would spin off its system-on-a-chip and memory test business in 2006. It also sold its stake in its joint venture Lumileds Lighting to develop new light-emitting diodes. Another major component in its plan to meet the demands of the new century involved a shift in leadership. In 2005, Bill Sullivan replaced Ned Barnholt as president and CEO.
Between 2001 and 2006, Agilent had shifted most of its Sonoma County manufacturing to Asian countries. However, in 2007, the company decided to expand its presence in northern California and launched a $200 million company-wide effort to upgrade domestic facilities. Intent on providing "excellent work environments that support innovation," Agilent had invested in remodeling part of its Liberty Lake facility and upgrading its Fountaingrove campus to develop a series of low-cost spectrum analyzers for cellphones and wireless devices in 2005. In 2007, the company focused on making its Loveland, Colorado, facility the hub for the company's Operations Support Systems Group, part of its testing and measurements business. Rounding out Agilent's California facilities was Santa Rosa, where it developed wireless test and measurement instruments for aerospace and military communications.
Indeed, the company always kept one eye on future expansion. Although Agilent decided in 2005 to consolidate its northern Colorado employees from a number of locations into a single building in Loveland, it noted the presence of empty land near the site and the possibility of future construction. It also continued to engage in strategic acquisitions. Already involved in nanotechnology, it increased its presence in the life sciences sector with the 2007 acquisition of Stratagene, which developed research products and diagnostic equipment, and Velocity 11, a maker of automated and robotic life sciences laboratory equipment. Such moves seemed likely to help the company become an important player in the 21st century.
Principal Subsidiaries
Yokogawa Analytical Systems.
Principal Competitors
Affymetrix, Inc.; Anritsu Corporation; Ansoft Corporation; Applied Biosystems Group; Applied Materials, Inc.; Fluke Corporation; GE Healthcare; IBM Software; Invitrogen Corporation; JDS Uniphase Corporation; Keithley Instruments Inc.; LeCroy Corporation; National Instruments Corporation; PerkinElmer, Inc.; Rohde & Schwarz GmbH & Co. KG; Tektronix, Inc.; Teradyne, Inc.; Varian, Inc.; Waters Corporation.
Further Reading
"Barnholt Steers Agilent Technologies Toward Profit," Northern Colorado Business Report, May 31, 2002, p. A12.
Bastian, Kristen S., "Consolidation at Agilent, HP Translates into 'Opportunity,'" Northern Colorado Business Report, November 25, 2005, p. A1.
------, "Loveland to Become Agilent Hub," Northern Colorado Business Report, September 16, 2005, p. 1.
"Communicating Under Pressure: Agilent Technologies CEO Receives IABC 2003 EXCEL Award," Communication World, August 1, 2003, p. 36.
Riply, Richard, "Agilent Rides Cellular Surge," Journal of Business, February 12, 2004, p. A1.
Roth, Daniel, "How to Cut Pay, Lay Off 8,000 People, and Still Have Workers Who Love You," Fortune, February 4, 2002, p. 62.
Souza, Crista, "Agilent Unlocks ASIC Vault and Enters Merchant Market," EBN, April 29, 2003, p. 1.
Sperling, Ed, and Jeff Chappell, "Biggest Test; The Back Page; Interview of Agilent Technologies CEO Ned Barnholt," Electronic News, November 25, 2002, p. 22.
— Carrie Rothburd
