NEW YORK-The Hewlett-Packard Co., Palo Alto, Calif., registered with the Securities and Exchange Commission Aug. 16 to spin off its test and measurement division by taking it public.
The unit, given the name of Agilent Technologies Inc., plans to raise up to $100 million through an initial public offering lead managed by Morgan Stanley Dean Witter and Goldman, Sachs & Co. Net proceeds will be paid to Hewlett-Packard as a dividend, which will be declared before the IPO is sold.
Agilent earned net income of $257 million on revenues of $7.9 billion during fiscal year 1998, which ended last Oct. 31.
Of that revenue total, it derived $4.1 billion from its instruments and test, measurement and monitoring systems, which are used to design, manufacture and support electronic and communications devices. This business unit also provides software used in the design of high-frequency electronic and communications devices.
The subsidiary also earned revenues of $1.6 billion last fiscal year from its semiconductor business, which provides fiber-optic communications devices and assemblies, integrated circuits for wireless communications applications, application-specific integrated circuits, optoelectronics and image sensors.
The remainder of its revenues last fiscal year were derived from providing testing and monitoring products to the health-care industry.
For the first six months of this fiscal year, Agilent reported net income of $231 million on revenue of $3.8 billion.
Hewlett-Packard said Aug. 16 it took a $60 million charge against earnings during the third quarter to reflect costs associated with the Agilent spin-off.
Although the parent company said this process probably will not be completed until mid-2000, Agilent’s new management expects to begin running the division as a separate company by Nov. 1. Edward W. Barnholt is president and chief executive officer, and Robert R. Walker is chief financial officer.
“Our competitors are numerous, ranging from some of the world’s largest corporations, such as General Electric Co., International Business Machines Corp., Lucent Technologies Inc. and Siemens AG, to many highly specialized firms, such as Anritsu Corp., PE Biosystems, Teradyne Inc. and Waters Corp.,” Agilent said in the disclosure statement filed with its public offering registration.
“To remain competitive, we will be required to develop new products and periodically enhance our existing products in a timely manner … We anticipate that we may have to adjust the prices of many of our products to stay competitive, and we will have to manage financial returns effectively.”
