Keysight Technologies tightens belt in response to slowdown

Noting a slowdown in parts of the tech sector, Santa Rosa’s Keysight Technologies will offer a voluntary retirement program for longtime employees and will end its defined benefit retirement plan for new workers in the United States.

The initiatives are part of a $25 million belt-tightening plan that the company will undertake over the next 24 months.

Keysight President and CEO Ron Nersesian said in a statement that company officials “believe the market has softened, particularly in the communications segment.”

“Wireless manufacturing was the weakest segment by far and that’s where we saw the biggest hit,” Nersesian said Tuesday in a conference call with analysts.

The company announced flat revenues and a drop in orders and profits for the quarter ending April 30.

Revenues for the quarter amounted to $740 million, essentially flat from a year earlier. Net income dropped to $96 million, down from $110 million for the same period a year earlier.

Officials maintained the decline in net income was largely due to factors related to Keysight’s separation last fall from Agilent Technologies, including the extra debt that Keysight took on as part of the split. Such factors make performance for the two quarters difficult to compare, they said.

Keysight is the world’s largest electronics measurement company and the biggest business ever based in Santa Rosa. It employs 9,600 workers around the world, operates 12 research and development centers and does business in more than 100 countries.

Orders last quarter declined 11 percent from a year earlier to $697 million. Much of that decline came from two orders totaling roughly $60 million last year that weren’t repeated in 2015, officials said. Another factor was the ongoing slowdown in Russia, which has struggled under a weak ruble and economic sanctions.

However, company officials said Keysight can remain profitable through both the boom and bust cycles that have become an inevitable part of the electronics industry. Keysight’s operations under Agilent did so partly by handing over a portion of sales and manufacturing work to outside contractors and paying only when products were made and sold.

In an effort to further control costs, Keysight will provide six months worth of pay for eligible workers who take part in a voluntary retirement program, said Senior Vice President Guy Séné.

It also will end its defined benefit retirement plan for U.S. workers hired after July 31, he said.

The company will continue to focus more efforts on three promising growth areas: products for wireless communications, “modular” products that allow the combining of components for customized measurement devices, and software testing programs. Keysight this year also has increased its investment in research and development, or R&D.

“R&D is really the core of what we do,” Séné said. He noted that Santa Rosa is Keysight’s largest facility for such work.

Keysight reported quarterly earnings of 56 cents per share, a decline of 15 percent from a year ago. When adjusting for various one-time factors, the company reported that earnings per share declined 13 percent to 70 cents a share.

The results were announced after U.S. markets had closed. Keysight stock closed Tuesday at $34.99, down $1.23 on the New York Stock Exchange. It fell an additional 92 cents per share in after-hours trading.

You can reach Staff Writer Robert Digitale at 521-5285 or robert.digitale@pressdemocrat.com. On Twitter @rdigit