Agilent jumps in market debut

Shares of Hewlett-Packard spin-off Agilent Technologies Inc., (NYSE: A) were up 16 to 46 Thursday in its market debut. The company priced its 65 million shares at $30 each.

The company increased its initial public offering to 65 million shares from 57 million and raised its expected price range to $26-$28 a share from $19-$22.

The underwriters include Morgan Stanley Dean Witter, Goldman, Sachs & Co., Credit Suisse First Boston, Merrill Lynch & Co. and Salomon Smith Barney, among others.

The spin off of computer maker Hewlett-Packard Co. (NYSE: HWP), which provides test and measurement products for such high-growth areas as the semiconductor and healthcare industries, was one of the businesses on which H-P was founded.

On Wednesday, H-P topped analysts' lowered estimates in its fourth quarter, earning $760 million, or 75 cents a share, on sales of $11.4 billion.

"The range increase wasn't much of a surprise," said Steven Tuen of IPO Value Monitor, who said he thought the increased range put the stock at "fair value." He added that the company's diversified offerings, including the "recession-proof" measurements business, and the "sexier semiconductor division" make it a good bet.

"The diagnostic measurement industry is growing quickly, and Agilent seems to be on top of the game," said Tom Taulli, analyst with Internet.com.

"Agilent should do well -- the downside has been minimized because of the company's big revenues, and actual profits. This is a real company -- it would be a nice addition to institutional portfolios," Taulli said.

Agilent had revenue of $5.88 billion for the last 9 months, compared to $5.96 billion in the 1998 period. Net earnings were $366 million, compared to $308 million in the 1998 period.

As a separate company from Hewlett-Packard, Agilent said it may experience increased costs resulting from decreased purchasing power which could dent its profits. Previously, Agilent has been able to take advantage of Hewlett-Packard's size and purchasing power to get goods, services and technology, such as computer software licenses.

Agilent faces competition ranging from big companies such as General Electric, International Business Machines Corp., (NYSE: IBM) Lucent Technologies, Inc. (Nasdaq: LU) , to other highly specialized firms, such as Anritsu Corporation, PE Biosystems, Teradyne, Inc. (NYSE: TER) and Waters Corporation, as well as many smaller technology startups.

Agilent said it would use net proceeds from the IPO to pay Hewlett-Packard as a dividend. At $27 a share, Agilent would raise $1.67 billion in the IPO. With 445 million shares outstanding after the IPO, the company would have a market value of $12 billion.

After the completion of Agilent's IPO, Hewlett-Packard will own about 87 percent of outstanding shares, which it has announced it plans to fully divest by the middle of calendar year 2000 by distributing shares to holders of Hewlett-Packard's common stock.