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Agilent: Is Big, But Acts Small

In the Net game, having huge growth rates is usually not very difficult. If last year the company had minimal revenues, then having blow-out quarters for the following year is no problem.

Rather, what is impressive is when a billion-dollar revenue company is able to produce growth rates like a Net company. An example is Agilent (A). The company was a spin-off from Hewlett-Packard last year.

The company has 42,000 employees and has customers in more than 120 countries (I didn't even know there were that many). Basically, the company designs and manufactures test, measurement and monitoring instruments -- such as for semiconductors, optical systems, life sciences, healthcare (well, just about anything that can be measured).

In the last quarter, revenues rose to $2.2 billion, which was up 26 percent from the same quarter a year ago. The company sees that revenues will be $10 billion for 2000.

Yes, the company is also profitable. Net earnings surged 77 percent to $131 million.

Let's take a look at the different segments. The chemical analysis division has been growing slowly (2 percent revenue growth from last year). However, with the boom in biotech, things should get better. Late last year, Agilent launched its DNA micro-array product that allows for the collection of genetic information.

The semiconductor division has been much stronger. Net revenues increased 22 percent in the prior quarter (compared to the same period a year ago). Revenues totaled $447 million and earnings were $31 million (compared to $9 million in the same period a year ago). Agilent recently debuted its latest measurement system called the Agilient 93000 Series.

But the most enticing part of the company is the communications testing division. This segment focuses on the red-hot sectors of wireless and optical networks. In fact, the growth is so intense that Agilent has been aggressively adding capacity.

But the company recognizes that, in order to maintain leadership, there needs to be a laser focus on innovations. To this end, the company is creating a new cutting-edge R&D facility in Scotland. But Agilent also understands that technology alliances are also effective. Recently, the company signed a major deal with Qualcomm to deliver test solutions around the CDMA standard.

Agilent's results from last quarter far exceeded expections. While First Call pegged earnings at 22 cents, Agilent instead produced 28 cents. With the company leading the charge in strong markets, it is likely that Agilent will continue to surprise investors.