Interview: Agilent C.E.O. --- Bill Sullivan
>> welcome back, everybody. shares of agilent have been down as much as 7% this morning. this is the company that’s the biggest maker of scientific testing equipment. they said second quarter profits went up 21%, but the forecast for the third quarter sales was lower than analysts were forecasting. joining us now by phone is agilent c.e.o. bill sullivan. mr. sullivan thanks for being with us this morning.
>> it’s a pleasure.
>> we have to start off obviously talking and addressing the stock declines we’re seeing this morning at 7.5% drop. why do you think that that’s happening?
>> well, i’m not sure. again, it’s hard to react to momentary movements in the stock but agilent had a very solid q-2. we delivered revenue and earnings per share at the high end of expectations. the guidance we have given for the second half of the year is consistent with the outlook we provided when we announced the restructuring of the company august 15 of last year.
>> i think part of the reason why the stock may be down is some analysts were concerned about the next quarter. they saw some signs of moderating growth in certain businesses and in certain areas. is that true?
>> well, based on the performance we delivered in q2, our order growth of 21% from last year was really good. we have good strong backlog going into q-3, and we are confident of the guidance we provided.
>> nonetheless, the third quarter sales numbers that you talked about, they are less than what the analysts were expect were analyst expectations just unreasonably high?
>> i believe the guidance we have given and again we have been very cheer clear, is consistent with the guidance that the analysts have taken. q3 tends to be our seasonally weakest quarter for revenue and q4 tends to be highest we reflected that in guidance.
>> doug cliggott of racepoint, mr. sullivan. could you talk about what you are seeing either across geographyes or industries and any surprises in strength or lack thereof from client orders?
>> overall, i think the business is okay. i mean, the business is robust, and in terms of investment and measurement equipment around the world. our business in china, and in india continues to grow, and high double digits. we’re very pleased with that. we’re pleased with the increased business in japan, as they economy turns around. likewise as we mentioned in the conference call, our aerospace and defense business and north america had a strong quarter, and europe continues to do well. if there’s anything that we have some concern, and has been well documented in the industry is big u.s. pharmaceutical industry is going through a process of adjustment, and you know, there could be weakness on our analytical equipment to big pharma.
>> and how do you mitigate against that, that potential weakness?
>> well, we’re very excited with our whole new product launch in our bioanalytical segment in q2. not only have we upgraded our gas and liquid cloe matography lines we have entered into the market for high performance mass spec. this is an instrument that goes right into biotech and pharma. the market acceptance has been quite good. we’re excited in our communities to grow and take market share even in a soft market .
>> in terms of the balance sheet how much of the 4.5 billion stock acquisitions have been -- i mean―stock repurchase plan have you completed so far?
>> we have completed over 80% of our stock repurchase plan, and again, assuming normal market conditions, we will complete the 4.5 billion stock repurchase by the end of the fiscal year.
>> and then what? do you reconsider opening up another man or do you possibly reconsider a dividend. i know that you have told thaws you would consider a dividend. where are the considerations now?
>> our position really hasn’t changed. we have three options. one is it to continue to invest in the business, look for opportunities to grow, and create shareholder value. the second opportunity is to continue stock repurchase plans, and the third opportunity is to declare a stock dividend. of course, we’ll need to review the options as we go into fiscal year 2007. all right
>> in terms of overall trends, what are you seeing. you mentioned that you are expecting a weakness in the u.s. pharmaceutical industry. what is the probabilities of that?
>> i think there’s no doubt right now that the u.s. pharmaceutical industry is looking at ways to improve efficiency, productivity, and so activity going on in big pharma is going on as we speak. and as i had mentioned, though, we have a very strong new product portfolio. we have also made investments in bioinfomatics, the software to help big pharmas to manage their businesses. we’re okay.
>> mr. sullivan, thank you very much for your time. we take a quick break.
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Listen Focus: World & National News
>> president bush says he will be sending troops to the mexican boarder. 6,000 from the national guard. they’re supposed to help stop the flood of illegal immigrants coming into the u.s. but the president had some controversial ideas on how to deal with the ones who are already here. he spelled out his plans during a televised speech last night. let’s get you more details on that, and reaction from our peter cook live at the white house.
>> suzy, busy day here at the white house already. president bush welcoming australian prime minister john howard here a short time ago. the two men meeting now. it is still the president’s immigration address to the nation that’s the focus of the administration’s activities today. businesses that count on immigrant labor have largely backed the president’s call for comprehensive immigration legislation. now the businesses are hoping the president’s new ideas on enforcement are enough to push through a compromise in congress.
>> the united states must secure its borders.
>> to do that, president bush says he wants to deploy up to 6,000 national guard troops along the u.s./
