Keysight beats expectations with $88 million profit
Keysight Technologies (NYSE: KEYS) reported 2016 fiscal-year second-quarter profit of $88 million, equivalent to 61 cents a share, exceeding expectations of many analysts.
In its sixth quarter as an independent company apart from Agilent Technologies, Keysight saw its revenue dip to $731 million compared to $740 million revenue in the same quarter of 2015.
Keysight (keysight.com), a Santa Rosa-based global electronic-measurement-technology company, had revenue of $2.9 billion for all of fiscal 2015. The company separated from parent Agilent in November 2014.
In the three segments of its business, Keysight communications sales climbed 2 percent to $252 million, aerospace and defense business rose 3 percent to $160 million, and industrial, computers and semiconductor revenue declined 4 percent to $323 million.
The communications market, including wireless, is $5 billion worldwide. The aerospace and defense market is $3 billion. Industrial, computers and semiconductor market is $5.5 billion. Keysight’s combined total market is $13.5 billion.
About 20 percent of Keysight revenue comes from China, according to Guy Séné, Keysight’s senior vice president of measurement solutions and worldwide sales.
“In China we did see double-digit growth,” especially for research and development. “They are starting to build a semiconductor industry. This is a growth driver for us.” Optical communications business also accounts for growth in China for Keysight, he said.
“We did see a little uptick in Russia. I would not call this a trend yet,” Séné said.
“The whole market is still uncertain,” Séné said. “While we are seeing some strength, it’s difficult to become overly optimistic.”
In August 2015, Keysight completed a $600 million acquisition of Anite, which does radio-channel emulation and network testing, and makes protocol-testing software. Anite, which contributes about $170 million in annual revenue, will allow Keysight to boost its market penetration in wireless technology. Anite has about $50 million of revenue in the wireless market.
Séné manages the former Anite, including an engineering team in Finland. Anite will help Keysight compete in the move to 5G. Anite participates in European and South Korean projects to explore the 5G network. Once Anite is fully integrated into Keysight, Séné will turn over management of the enterprise to Keysight’s communications group. “My role is to do the integration,” he said.
The Anite acquisition helped Keysight provide test software that it did not previously have, including products that address R&D in the wireless segment.
In August 2015, Keysight also acquired Electroservices Enterprises Ltd., formerly based in the U.K. The company provides electrical, mechanical and physical calibration, repair and asset management services to Keysight’s defense, telecom and industrial customers.
For the third quarter of fiscal year 2016, Keysight forecasts revenue in the range of $697 million to $737 million, with revenue growth rising 4.8 percent to 10.8 percent, and earnings per share pf 50 cents to 64 cents a share.
On May 19, Keysight had market capitalization of $4.5 billion.
