Two cabling leaders report slight upturn, offer guarded optimism for improved business

April 1, 2002
Agilent Technologies (, known for its cabling testers, says it is at last seeing a slight upturn after weathering the recession, while cable-maker Belden Inc. ( has reported profits for its fourth quarter.

Agilent Technologies (, known for its cabling testers, says it is at last seeing a slight upturn after weathering the recession, while cable-maker Belden Inc. ( has reported profits for its fourth quarter. But the maker of Category 5e cable still expects 2002 to be challenging.

Agilent says it is encouraged by early signs that the U.S. economy is reaching the bottom of the downturn, and they anticipate a modest recovery will begin this spring. "We are cautiously optimistic, and beginning to see stabilization," says Hilliard Terry, Agilent's director of investor relations.

The company, which produces the WireScope cable tester product line, recently reported orders of $1.47 billion and revenue of $1.43 billion for the first quarter of fiscal 2002. On an operating earnings-before-goodwill basis, the company lost $134 million, or $0.29 per share-better than company expectations of a loss of $0.40 to $0.60 per share.

"While business conditions remain extremely difficult, we are seeing the first signs of a modest upturn," says Agilent President Ned Barnholt. "Compared to last year, orders and revenues are down 41% and 44%, respectively. But, after five consecutive quarters of steep declines, first quarter net orders were up 20% over the fourth quarter of last year.

"With order cancellations of $80 million down sharply compared to last quarter's $250 million, we have some confidence that market conditions in our businesses are stabilizing," Barnholt continues.

This news comes after Agilent took what company representatives describe as "tough actions" to restore its financial health.

Agilent announced two rounds of layoffs in the past two quarters, leaving it with 5,000 fewer employees or an overall reduction of 18% of its work force. The company has restructured, consolidating its manufacturing facilities and cutting discretionary expenditures.

Terry says much of the good news comes from the test and measurement orders. He says orders for these products were off 49% from one year ago but were 23% above fourth quarter levels.

Still, sales for telecom products remain slow, he says.

"From our vantage point, we are seeing some stabilization in the test and measurement space. But the telecom aspect is weak," says Terry. "But broadly speaking, in a more enterprise focus, we see signs of life."

Terry says 2001 was an important year for Agilent, which released new products across the board in all businesses, including communications testing, portable optical-test equipment, and others. Terry says Agilent is convinced that these products are producing market share gains and will help the company outpace its markets when economic conditions improve.

I see the light

At St. Louis-based Belden, meanwhile, President C. Baker Cunningham says, "We are being cautious in 2002 because this downturn is straddling two years, and making 2002 not look that great, even though the trend looks better for the end of the year."

Cunningham says Belden began the fourth quarter anticipating further contraction in the electronics and communications markets in North America and Europe. These markets did turn out to be weak, he says, but the company still managed to maintain profitability.

Revenues of the electronics segment were $141.9 million in the quarter, a decline of 33.1% from $212.2 million in the fourth quarter of 2000, and a sequential decline of 5.0% from the third quarter of 2001. In the communications segment, revenues for the quarter were $65.5 million, a decline of 37.6% from $104.9 million in the year-ago quarter and a sequential decrease of 28.8%. This reflected lower sales to major communications customers in both Europe and North America and the absence of orders from a private-label customer.

Belden, which makes data-networking products that meet Category 5e technical standards or higher, reports that in 2001, it gained market share in exterior copper telecommunications cable.

"We are seeing some improvement in British telecommunications," says Cun ningham. "Last year, we cut back substantially from the year before, but we expect to see improvement in their copper cable spending before the end of 2002."

To get to this point, Belden focused on projects that improve manufacturing processes. Cunningham says this generated strong cash flow, helping the company reduce its debt by $38 million during the year. But the company also had to make some sacrifices in order to get to the point of profitability. It reduced its staff by 1,000 employees by the end of 2001. In January, it adjusted its cost structure by reducing staffing levels in Europe.

The company projects that earnings for this year will depend on the level of investment in technology and communications industries, and the timing of the general economic recovery.

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