Agilent: A Second Chance for Investors

I’ve written about Agilent before.
Yet, the more I follow it, the more I like it. I think it is worth taking another look,
especially with the plunge in Nasdaq recently.

The company is a spin-off from Hewlett-Packard. Historically, mega
spin-offs tend to be good investments. The new company is freed from the
bureaucracy of the parent and can focus on its core competencies. Look at
Lucent. This was a spin-off of AT&T. Now Lucent has a market cap larger
than AT&T.

As for Agilent, you are buying a high-tech powerhouse. In all, the company
has four main business units: test and measurement, semi-conductor
products, healthcare solutions and chemical analysis. Agilent has 42,000
employees and has facilities in more than 40 countries.

In the latest quarter, revenues were up 24 percent to $2.5 billion. Profits
increased by 6 percent to $166 million. Part of the reason for slow profit
growth was that the company launched an extensive global branding campaign.

Even though it is large company, Agilent still has tremendous innovative
strengths. For example, the company recently announced a single-chip 2
gigabit-per-second Fibre Channel controller. The technology is used for Net
access, digitized video and enterprise storage applications.

Or take its DNA 500 LabChip, which is called “lab-on-a-chip”. This
technology allows for analysis of DNA fragments. It helps with DNA samples
so as to develop drugs faster.

Oh, there is also M3 and M4 portable monitors. These allow for two-way
wireless communications for doctors and patients. Doctors can get critical
patient information from almost anywhere.

Actually, there’s another reason that Agilent may represent a good value. I
call it the post spin-off fall-off. Heres how it works. Hewlett Packard
spins off Agilent to shareholders and in the process, raises a huge amount
of capital. Then, the remaining shares that HP holds are distributed to
existing shareholders of HP. However, not all of these shareholders want to
hold onto Agilent. Rather, the original intent of many funds was to buy HP,
not Agilent. Thus, there tends to be lots of forced selling. And yes,
that is what has been happening, as HP recently distributed a whopping 84.1
percent of Agilent’s common stock to HP shareholders.

Because of this, there is likely to be some weakness temporarily. But it is
definitely good news for Agilent bulls who want to get a good price on the

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