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Agilent Restructures Unit, Cuts 650 Jobs

NEW YORK — Test and measurement equipment maker Agilent Technologies Inc. (A.N) on Monday said it would slash 650 jobs and restructure operations at its troubled health care unit to try to return it to profitability.

Agilent's Healthcare Solutions Group, which has been the source of many of the company's problems recently, will reduce its regular workforce by 9 percent, or 450 workers, in addition to laying off 200 contract employees, the company said. The workforce reductions are to be completed by Oct. 31.

"The business's current financial performance is clearly unacceptable, and we don't intend to wait for market conditions to improve before implementing our plans,'' Agilent Chief Executive Ned Barnholt said in a statement. "We're firmly committed to strengthening this business and are confident that today's actions will help get HSG (Healthcare Solutions Group) back on track.''

While the restructuring is expected to result in annual savings of more than $80 million starting in fiscal 2001, the company said it expects to incur a one-time charge of about $25 million in the fourth quarter ending October 31 to complete the workforce reduction.

In July, the company had predicted that the unit would post losses of at least $30 million for the third quarter, a company spokesman noted. Now the company is looking at making the unit profitable as soon as possible -- probably by sometime next year, he said.

"We're trying for the fourth quarter, but that would be a stretch,'' company spokesman Steve Beitler said.

The unit will also accelerate a program begun in June to improve efficiency by transferring final assembly manufacturing operations from its Massachusetts facility to its production facility in Singapore. It will now also transfer some of its operations from its facilities in China and Germany to the Singapore facility.

In the meantime, the company will continue to invest in new products and technologies that cater to healthcare outside the hospital, such as equipment used in clinics and homes, Beitler said.

The company's shares responded positively to the news, rising 2-1/16, or more than 5 percent, to 42-1/2 in morning trading on the New York Stock Exchange.

The healthcare unit was one of the key factors Agilent blamed when it warned in late July that its third-quarter earnings would fall short of Wall Street forecasts. Agilent had said it expected to report earnings per share for the quarter of 18 cents to 22 cents, far short of the Wall Street consensus estimate of 35 cents a share.

Agilent, which was spun off by Hewlett-Packard Co. (HWP.N) earlier this year, is scheduled to report its third-quarter



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