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Agilent Technologies Inc. began business in November 1999 as a company with $8 billion in annual revenue and 43,000 employees. It was spun off by Hewlett-Packard Company, which wanted to concentrate on its computer, printing, and software businesses. Agilent's principal businesses include test and measurement, semiconductors, healthcare products, and chemical analysis products. Historically, Agilent's roots go back to the founding of Hewlett-Packard Company in 1939. Toward the end of 2000 Agilent announced it would divest its unprofitable healthcare products business for $1.7 billion.
Agilent's Roots in Hewlett-Packard: 1938-98
In 1938 Dave Packard and Bill Hewlett, both electrical engineers who graduated from Stanford University, created their first product, an audio oscillator used to test sound equipment. The product was used by Walt Disney's studios to test sound equipment in the production of the animated movie Fantasia. The next year Packard and Hewlett formed the Hewlett-Packard (HP) partnership on January 1, 1939.
During the 1940s, HP's test and measurement equipment won acceptance among engineers and scientists. With the advent of World War II, the trickle of government orders quickly became a flood. In 1942 HP constructed its first company-owned building, a 10,000-square-foot facility at 395 Page Mill Road in Palo Alto that combined office, laboratory, and factory space. Among the products that HP produced were a voltmeter designed by Dave Packard and microwave products, including signal generators developed for the Naval Research Laboratory and a radar-jamming device. After World War II HP developed a complete line of microwave test products, and HP became the acknowledged leader in signal generators. Hewlett-Packard was incorporated on August 18, 1947.
The 1950s saw HP develop its corporate objectives and a management style that became known as 'The HP Way.' In 1957 the company had its first public stock offering. Toward the end of the decade HP built its first manufacturing plant outside of Palo Alto in Boeblingen, West Germany. The company also established a European marketing organization based in Geneva, Switzerland.
During the 1960s HP continued to grow its test and measurement business, branching out into related fields such as medical electronics and analytical instrumentation. In 1960 HP established its first U.S. manufacturing plant outside of Palo Alto in Loveland, Colorado. In 1961 the company was listed on the New York and Pacific Stock Exchanges, and in 1962 it joined the Fortune 500 as the 460th largest U.S. corporation. HP celebrated its 25th anniversary in 1964, with Dave Packard being elected chairman, and Bill Hewlett, president. In 1966 the company established HP Laboratories as the company's central research facility. In 1969 Dave Packard was appointed U.S. Deputy Secretary of Defense, where he served until 1971.
For HP the 1970s was a decade of significant growth in earnings and employment. Net revenue grew from $365 million in 1970 to $3 billion in 1980, and the company's workforce grew from 16,000 to 57,000 employees. Toward the end of the decade Dave Packard and Bill Hewlett delegated day-to-day management of the company to John Young, who was named president in 1977 and CEO in 1978.
In the 1980s HP, like many other companies, was impacted by globalization, rapid economic change, and computer technology. Revenue more than doubled in the first half of the decade to $6.5 billion and reached $13.2 billion by 1990, when the company had 91,500 employees.
The rate of change accelerated even more in the 1990s, as web-based information and applications became more pervasive toward the end of the decade. Competition intensified, and time-to-market cycles were greatly reduced. In 1992 Lewis E. Platt became HP's president and CEO. In 1994 revenue reached $25 billion, and by 1997 the company had $42.9 billion in revenue and 121,900 employees.
Agilent Spun Off from HP: 1999
In 1999 HP announced a strategic realignment and the creation of a separate company, Agilent Technologies Inc., which consisted of HP's test and measurement, semiconductor, chemical analysis, and healthcare businesses. Hewlett-Packard would continue as a computing and imaging company that included all of HP's computing, printing, and imaging businesses. Edward W. (Ned) Barnholt was named Agilent's president and CEO. HP announced the formation of the new company on March 2, 1999, and on July 28 Agilent Technologies was given its name, a combination of 'agile' with the popular 'ent' ending that suggested high technology (compare, for example, Lucent, Scient, and Teligent).
The split went into effect on November 1--the beginning of Agilent's and HP's fiscal year--and Agilent had its initial public offering (IPO) on November 18, 1999. Some 65 million shares were sold at $30 each. The IPO involved 15 percent of Agilent's stock, with HP retaining 85 percent. HP planned to spin off the rest of its Agilent stock to HP shareholders in 2000. 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. HP stock also rose from $81 to $94.31.
Agilent began business with about 43,000 employees, approximately one-third of HP's workforce, and revenue of about $8 billion, the equivalent of about 15 percent of HP's revenue. It also took with it about one-third of HP Laboratories, which would be called Agilent Technologies Laboratories. After the split, HP would have about 80,000 employees and $40 billion in annual revenue.
Agilent's four businesses consisted of test and measurement, semiconductor products, healthcare solutions, and chemical analysis. In the area of test and measurement, Agilent provided companies in the communications, electronics, semiconductor, and related industries with standard and customized test and measurement solutions, including instruments and systems, automated test equipment, communications network monitoring and management tools, and software design tools. Customers included communications and network equipment manufacturers, providers of communications services, designers and manufacturers of semiconductor products, and designers and manufacturers of electronic equipment.
In the field of semiconductors, Agilent was a supplier of semiconductor components, modules, and assemblies for high-performance communications infrastructure, computing devices, and mobile information appliances. Products included fiber-optic communication devices, components, and assemblies; integrated circuits for high-speed local area networks (LANs) and storage area networks (SANs); devices and integrated circuits for microwave and radio frequency (RF) mobile wireless devices and infrastructure; infrared components for short-range communications; ASICs (application specific integrated circuits) for workstations, servers, and laser and inkjet printers; LEDs for electronic image and information display; and more. These products were sold to original equipment manufacturers (OEMs) and contract manufacturers in the communications and computing industries.
Agilent's healthcare solutions were focused on electro-medical clinical measurement and diagnostic solutions. Products and services included patient monitoring systems, imaging systems, external defibrillators, cardiology products, and related services and support. These products enabled medical professionals to gather and analyze information in a variety of settings, from intensive care units to doctors' offices.
In the field of chemical analysis, Agilent provided analytical instrument systems that enabled customers to identify, quantify, analyze, and test the properties of substances and products down to the atomic level. The company's main product lines in this area were chromatography, spectroscopy, bio-instrumentation, and related consumables. These products were used by scientists, engineers, and technicians mainly in the hydrocarbon-processing, environmental, pharmaceutical, and bioscience markets.
Approximately 75 to 80 percent of Agilent's revenue came from its test and measurement business and its semiconductor business, with healthcare solutions and chemical analysis accounting for about 20--25 percent. Realizing that Agilent's future was tied to the growth of the communications industry, and specifically to the Internet, where networks and devices required more and more test equipment, Wall Street sent Agilent's stock to a 52-week high of $79.25 on December 31, 1999.
An Independent Company: 2000
In 2000 Agilent continued to introduce new products, form strategic partnerships, and make acquisitions. One key partnership was formed with wireless chipmaker Qualcomm Inc., which included the incorporation of Agilent's RFIC (radio frequency integrated circuit) test equipment with Qualcomm's RF chips. Other alliances were formed with Alcatel, Rosetta Inpharmatics Inc., PE Biosystems Group, Xilinx Inc., American Healthways, STMicroelectronics, Extended Systems Inc., and Adeptec Inc.
Acquisitions in the first half of 2000 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. The acquisition helped boost Agilent into a leadership position as a provider of third-party testing services. Agilent also acquired 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; and SAFCO Technologies, a subsidiary of Salient 3 Communications Inc. and a supplier of planning, measurement, analysis, and predictive software systems for the wireless industry.
At the Optic Fiber Communications show in March 2000, Agilent introduced its photonic switching platform, which eliminated the need for electronics and moving parts. The technology allowed voice, video, and data to be switched as optical signals without converting them from photons to electrons. The photonic switching platform was designed to improve the provisioning and management of wavelengths across networks as well as to speed the time-to-market for optical devices. Agilent entered into a partnership with Alcatel to develop optical network switching products based on the platform for delivery by the end of 2000.
On June 2, 2000, Hewlett-Packard distributed its shares of Agilent to HP shareholders, making Agilent a fully independent company. For the rest of the year Agilent would execute its strategy of selling off its unprofitable businesses to focus on faster-growing markets for communications and measurement equipment. In August 2000 Agilent announced the acquisition of the eCamera business unit of PhotoAccess.com Corp. Agilent also acquired Digital Technology Inc., a developer of network-protocol test solutions.
For its fiscal fourth quarter ending October 31, 2000, Agilent reported that quarterly net income more than doubled to $305 million, compared to $146 million in the previous year's fourth quarter. Quarterly revenue rose 38 percent from $2.45 billion in fiscal 1999 to $3.37 billion in fiscal 2000. For the year, revenue increased to $10.77 billion, compared to $8.33 billion in fiscal 1999. Net income increased from $512 million in fiscal 1999 to $757 million in fiscal 2000.
In November 2000 Agilent agreed to buy Objective Systems Integrators for about $665 million. Based in Folsom, California, Objective Systems Integrators had about 400 employees and specialized in communications test software. Its software helped communications providers, such as Internet sites and e-commerce systems, provide more reliable service. For fiscal 2000 ending October 31, 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.
Earlier in the month Agilent announced it would sell its healthcare products business to Royal Philips Electronics NV for about $1.7 billion. Agilent had experienced falling orders for its healthcare products during fiscal 2000 and had laid off about 650 workers in its Healthcare Solutions Group. Quarterly operational losses for the healthcare products business were about $40 million. The sale of the healthcare products group, which was headquartered in Andover, Massachusetts, was expected to close by mid-2001.
In December 2000 Agilent signed an agreement to acquire ATN Microwave Inc., which specialized in microwave measurement solutions for wireless and high-speed data communication applications. The acquisition gave Agilent products, engineering expertise, and intellectual property related to the measurement of multiport devices, balanced circuits, signal integrity, large-signal characterization, and noise, as well as the electronic calibration of test instruments. HP planned to integrate ATN into its test component business headquartered in Santa Rosa, California. Also in December 2000 Agilent sold its Automation Integration Software (AIS) business to Verano. AIS was a division of Agilent Technologies Canada Inc.
For the future Agilent planned to focus on achieving strong growth in its communications and life sciences businesses. Earlier in 2000 the company had created a new Life Sciences Business Unit as part of its Chemical Analysis Group to focus on the demand for its life sciences products. In addition, the company had added manufacturing capacity in both communications and life sciences to address the strong demand for its products in those areas.
Principal Subsidiaries: Agilent Technologies World Trade, Inc.; Microsensor Technology, Inc.; Pete Inc.; Qos-Effective Systems Ltd.; Rockland Technologies, Inc.; Security Force Software, Inc.; Scope Communications, Inc.; Telegra Corp.; Versatest, Inc.
Principal Divisions: Chemical Analysis Group; Semiconductor Group; Test and Measurement Group.
Principal Competitors: General Electric Co.; International Business Machines Corporation; Lucent Technologies Inc.; Siemens AG; Anritsu Co.; Marconi Communications Ltd., Network Associates Inc.; Emulex Corporation; LSI Logic Corporation; QLogic Corporation; Vitesse Semiconductor Corporation; Motorola Inc.; NEC Inc.; EG & G Inc.; PE Biosystems Group; Shimadzu Corporation; Thermo Instrument Systems Inc.; Waters Corporation.
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