Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Executives

Unknown Executive -

James G. Cullen - Non Executive Chairman, Chairman of Nominating/Corporate Governance Committee and Chairman of Executive Committee

Marie Oh Huber - Senior Vice President, General Counsel and Secretary

Lisa Brenten -

William P. Sullivan - Chief Executive Officer, President, Executive Director and Member of Executive Committee

Agilent Technologies Inc. (A) 2012 Annual Meeting of Shareowners March 21, 2012 11:00 AM ET

Unknown Executive

Ladies and gentlemen, please welcome Agilent's nonexecutive Chairman of the Board, Mr. Jim Cullen.

James G. Cullen

Thank you very much. Good morning, everyone, and welcome to Agilent's 2012 Annual Meeting of Shareowners and of course, our first time in this venue in our headquarters. We're very, very glad that you can all join us here this morning.

There are actually 2 parts to today's meeting. First, we will cover the official annual meeting and 3 items of business that shareowners have been asked to vote on. And then, Bill Sullivan, Agilent's President and CEO, will offer his thoughts on the state of the company. And then after Bill's comments, we'll be very happy to take all of your general questions.

So let's start by calling Agilent's annual shareowner meeting to order.

We're conducting this meeting today in accordance with the company's bylaws. We do have 3 items of business on the agenda, and they are: To elect 3 directors to 3-year terms, to ratify the Audit & Finance Committee's appointment of PricewaterhouseCoopers as the company's independent registered public accounting firm for the 2012 fiscal year, and third, an advisory vote by our shareowners to approve the compensation of Agilent's named executive officers for fiscal year 2011.

Before we get to the official business of the meeting, however, I'd like to introduce members of the Agilent board and the Agilent senior management team, who are here with us today. And I would appreciate it if each of would stand as I call your name.

First, I'd like to introduce the members of our board beginning with of course, Bill Sullivan, up here with me, who in addition to serving as the President and CEO has also served as a director of Agilent since 2005; Paul Clark, who has served as a director since 2006; Heidi Fields, who has served since 2000; Bob Herbold, who has served since 2000 as well; Koh Boon Hwee, who has served since 2003; Dr. David Lawrence, who has served since 1999; Barry Rand, who has served since 2000; and Dr. Tachi Yamada, who joined the board in 2011.

Here on stage helping to conduct the meeting is Marie Oh Huber, our Senior Vice President, General Counsel and Secretary.

Let me also introduce a number of other people here from Agilent.

First, Ron Nersesian is Executive Vice President, Chief Operating Officer; Mike McMullen is Senior Vice President, Agilent and President, Chemical Analysis Group; Nick Roelofs is Senior Vice President, Agilent and President, Life Sciences Group; Guy Séné is Senior Vice President, Agilent and President of the Electronics Measurements Group; Gooi Soon Chai is Senior Vice President, Order Fulfillment and Supply Chain; Didier Hirsch is Senior Vice President, Chief Financial Officer. Jean Halloran is Senior Vice President, Human Resources; Rick Burdsall, Senior Vice President, Chief Infrastructure Officer; Darlene Solomon, Senior Vice President and Chief Technology Officer; Dominique Grau, Vice President, Global Compensation, Benefits and HR Services; Mark Orton, Vice President, Internal Audit; Alicia Rodriguez, Vice President in Investor Relations; and finally, last but certainly not least, Neil Dougherty is our Vice President and Treasurer.

So before we start on the official business, on the agenda, I'd like to just review a few of the rules of the meeting quickly. Shareowners who would like to speak on these issues are welcome to do so in accordance with the rules that we've established for some time now. They apply both to the shareowner meeting and the company presentation after the meeting. There's a limit of 3 minutes per speaker, 2 minutes for all speakers per topic. If you'd like to speak during the meeting, please go to 1 of the 2 numbered microphones on either side of the room. Either I or Bill will recognize each speaker by microphone number. Please wait until you are recognized before you start to speak.

As a reminder here, we ask you to turn off your cell phones, your pagers and that you not use cameras, video or audio equipment. Thank you.

Okay, so let's start with the official business of the meeting. First, Agilent's Board of Directors has appointed Lisa Brenten of Computershare Investor Services to serve as our Inspector of Election for this year's meeting. Lisa has taken and signed an oath as Inspector of Election. This document will be filed with the minutes of today's meeting.

Computershare Investor Services has certified that starting on February 8, 2012, proxy materials or notice of the availability of proxy materials were mailed to all shareowners of record as of January 23, 2012. Copies of these proxy materials and related certificates will be attached to the minutes of today's meeting.

Marie Huber, Secretary, has in her possession a list of the shareowners of record as of January 23, 2012. Marie, would you please report now on the number of shares entitled to vote at today's meeting?

Marie Oh Huber

The Inspector of Election has informed me that as of January 23, 2012, there were 347,535,757 shares of common stock outstanding, each entitled to 1 vote. January 23, 2012, was the record date set by the board for the determination of eligibility to vote at today's meeting.

James G. Cullen

Thank you, Marie. Please include a record of the number of shares entitled to vote in the minutes of today's meeting. Lisa, would you please report to us on the shares represented at the meeting?

Lisa Brenten

My examination of the proxies on file shows that there are present by proxy 297,775,064 shares of common stock, all of which are represented by Mr. Sullivan and Ms. Huber. We would ask any shareholder who has not previously submitted a proxy and who wishes to vote at today's meeting to please complete and submit a proxy card at this time. The polls are now open for voting.

James G. Cullen

Thank you, Lisa. Please prepare and file with the Secretary a written report on the final count of shares in attendance at the meeting. The Secretary will filed this report, along with the proxy materials in the records of the company.

Since we do have a majority of outstanding shares represented at the meeting, I declare that there is a quorum present, and that we may proceed with the business of the meeting.

We will dispense with the reading of the minutes from last year's meeting and deem them approved. If any of you would like to see them, Marie does have a copy that you can review following this meeting.

Now I will review all 3 of the items that shareowners have been asked to vote on, and then I will take whatever questions there may be on these 3 subjects.

The first item is the election of directors. Agilent's board is divided into 3 classes of directors, with each class serving a staggered 3-year term. And this year, you've been asked to vote on the reelection of 3 directors, Robert Herbold, Koh Boon Hwee and Bill Sullivan. The biographical information on these 3 nominees and their qualifications to serve as director are contained in your proxy material.

The second item of business is to ratify the Audit & Finance Committee's appointment of PricewaterhouseCoopers as the company's independent registered public accounting firm for the 2012 fiscal year. And at this time, I'd like to introduce to you Michael McLachlan from PricewaterhouseCoopers, who is responsible for the Agilent account.

The representatives from PricewaterhouseCoopers will be available following the meeting to respond to any questions that you may have.

The third and final item of business is an advisory vote of the shareowners to approve the compensation of Agilent's named executive officers for fiscal year 2011. This compensation is described in the proxy materials that have been distributed by the company in anticipation of this meeting. The advisory vote is nonbinding on the company, however -- but the Board of Directors values your opinions and will consider the outcome of this vote in establishing compensation philosophy and making future compensation decisions for the company's executive officers.

So having outlined the 3 proposals that we are asking shareowners to vote on, I would like to open the floor to any shareowners who might have a question concerning these 3 proposals.

Just as a reminder, there will be time at the end of the meeting after Bill speaks to ask more general questions about the company. So if anyone does have a question on the 3 proposals being voted on, please go to 1 of the 2 microphones. If not, I'll make the final call for proxies and ask Lisa to report on the results of the vote. Are there any proxies in the audience that would like to vote?

Okay, Lisa, could we please have the preliminary results of these votes?

Lisa Brenten

The polls are now closed for the election of directors, and the votes submitted are as follows: There were 250,651,757 shares voted for the company's slate of directors. This is 97% of the shares voted at the meeting.

James G. Cullen

Thank you, Lisa. Based on these preliminary results, I declare that the 3 nominees have been elected to serve new 3-year terms.

Now I'll ask Lisa to report on the results of the votes to ratify the Audit & Finance Committee's appointment of PricewaterhouseCoopers as Agilent's independent registered public accounting firm.

Lisa Brenten

The polls are now closed for voting to ratify the Audit & Finance Committee's appointment of PricewaterhouseCoopers as the company's independent registered public accounting firm. There were 292,816,314 shares voted in favor of this proposal. This is 98% of the shares voted at the meeting.

James G. Cullen

Thank you, Lisa. Since that is also well above the required majority. I declare that the Audit & Finance Committee's appointment of PricewaterhouseCoopers to serve as our independent auditors for 2012 has been ratified.

Now I'll ask Lisa finally to report on the results of the advisory vote to approve the compensation of Agilent's named executive officers.

Lisa Brenten

The polls are now closed for voting on the approval of the compensation of Agilent's named executive officers for fiscal year 2011 as described in the company's proxy statement. There were 241,600,381 shares voted in favor of this proposal. This is 93% of the shares voted at the meeting.

James G. Cullen

Thank you. Based on this report, I declare that the compensation of Agilent's named executive offices for fiscal year 2011 has been approved.

In the next several days, Agilent will publicly report the final official results of today's votes. If you are interested, you can review these results through our public SEC filings, which can be found through the Investor Relations page on the Agilent website.

That does conclude the official business of today's shareowner meeting. I declare that the formal part of today's meeting is hereby adjourned. And we certainly hope that you will stay with us for Bill Sullivan's discussion of the company's strategies and the company's opportunities. And as I said earlier, we will leave plenty of time at the end to answer your questions.

So now, I will be very happy to conclude the business portion and turn to the main event of today's meeting, and that is Mr. Bill Sullivan.

William P. Sullivan

Thank you, Jim, and hello, everyone. Over the next few minutes, what I'd like to do is give you a quick overview of our performance in 2011, but even more importantly, talk about 2012 and where the economy is, where we're headed and what our strategy is.

If there's any message I'd like to leave with all of you, is that 2011 was the best performance in the history of the company since we separated from Hewlett Packard, and secondly, that we are very, very well positioned moving into 2012 even with all of the economic uncertainty.

Before I start, though, I do have to share the safe harbor. Essentially, what this means is that I may say something that is future-looking. The company has no obligation to follow-up with any comments I make today about the future given the uncertainty of the future moving forward. Please reference all of our GAAP reporting that is on the agilent.com website to ensure that you're familiar with everything that we have filed in relationship to the company.

As you know, the company itself is organized into 3 major business sectors: the Electronic Measurement Group, where it was the very, very beginning of the company back in 1939, Chemical Analysis and Life Sciences. And if you look at 2011, you can see that organically, the company grew 17% to $6.6 billion, record high operating profit of 20%, and the highest earnings in our history at $2.95 a share.

In addition to that, the great news is, is that the performance across the 3 sectors was excellent. In Electronic Measurement Group, as you can see, is $3.3 billion, 23% operating profit, with the highest operating profit in our history. In fact, for many of you that remember Test & Measurement back in HP days, I would argue that this performance was really outstanding even compared before the separation. So just an outstanding -- and again, the Electronic Measurement Group continues to be the foundation of the company.

Chemical Analysis, even with the Varian acquisition, and the bulk of the Varian acquisition went into this group, returned to above 20% operating profit while continuing to grow very, very well. And finally, Life Science, which is the biggest investment we've made in the future, is at $1.8 billion. The operating profit was very respectable. Again, lower than the other 2 groups, but very, very deliberate as we continue to make large investments in research and development and large investments in investing in our Life Science sales force.

And again, several years ago, we separated our sales force, one focusing on the Chemical Analysis market, the other one on Life Science, and we're making the investment because I believe that our Life Science opportunity is by far the biggest growth opportunity that we have in the company, and I'll talk about that in a moment.

So if you look at Agilent and the transformation that we announced in 2005, as many of you remember in 2005, we divested 40% of the company, the semiconductor-related business, to focus on our core capability in measurement science. I always joke that the first measurement tool is discovered in Mesopotamia in 3000 BC. Outside of agriculture, there's not too many industries have been around for 5,000 years. So all of you when we're here, so I think we have a good, another 5,000 years ahead of us in terms of measurement science, and that really is the core expertise that we have moving forward.

We made those divestitures. We survived the recession in 2009, and the last 2 years, the performance has really been outstanding and 2011, as I said, was the best performance in our history.

In terms of capital allocation and as you know, Agilent generates enormous amount of cash in addition to the proceeds of the divestitures, we have repurchased $8.6 billion of stock since 2005. We've effectively, dramatically reduced our share count from roughly 550 million shares as you heard today of roughly down to 347 million shares. That obviously has a favorable impact on our stock price.

Secondly, we have bought over $1 billion worth of revenue through acquisitions. About $2.3 billion was invested in our growth moving forward. Again, the biggest focus here has been in the analytical space in Chemical Analysis and Life Sciences. And for all of you, and a question that we received almost every year is, when are you going to pay a dividend? And as you know, we declared a dividend in January of 2012, and in April will be the first dividend in Agilent's history.

So again, there's another example. Thank you. That's an example of us again not only investing in the future of the company, but make sure that we are very confident of what we can do to return value to our shareholders.

And just to complete 2011, I talked a lot about our financial performance. Additional comment here is the amount of cash that we have generated because of the operating model we have. Last year, we generated $1.1 billion of free cash. I will put -- I never take a political position in general, but I do take one and one issue that we have with the existing tax policy of the United States, this dramatic or almost 95% of our cash is trapped overseas. And this is an issue that's in Silicon Valley, where there are billions and billions of dollars trapped as multi-internationals around the United States, $1 trillion. It's a real issue. And so I know that many people ask, when are you going to raise the dividend? We just started the dividend. When are going to raise it? This whole issue of cash trapped outside the United States with the U.S. having a very, very high corporate tax rate is a real dilemma for companies that are multi-international.

Only 28% of our business is inside the United States and so you can imagine that by balance of our businesses outside the United States, therefore, the balance of our profits are going to be outside of the United States. So it's really quite difficult for us to tax effectively to continue to bring cash back in the U.S. So it's a big issue that we have. And again, have been very public with this. And when Didier and I were back in New York for our Analyst Day 2 weeks ago, we were very clear on this whole issue of our tax. Great news that the company's generated an enormous amount of cash. The issue we have, a lot of it is trapped overseas.

In terms of the various businesses, and again, just an outstanding year, the big area in Electronic Measurement, we have always been a powerhouse in RF microwave design. We've always been a powerhouse in frequency domain. Time domain, we've always been #2. We have made enormous progress in the oscilloscope market to continue to be able to grow that market, and we've just been very, very pleased with the progress we have made with that.

Secondly, we have always made big feature-rich instruments. And we have entered into the module business. Basically, what this is, is transducers, measurement transducers that can be configured by the customer, and you basically use the PC to do a lot of the control and the analysis. And we have entered that market. We've always been in the market, but with a concentrated effort to be able to provide our customers a choice between the feature-rich instruments and the modules. So again, very, very pleased in that.

Chemical Analysis. Not only have we brought enormous amount of technology to market, this is the area where we have done an excellent job of capturing emerging market opportunity, either in energy, environment and food. I'm going to talk about that, but the team has done an incredible job while continuing to integrate the Varian product line.

And finally, in Life Science, we continue to provide leading-edge technology. We've done a great job of bringing in automation, chemical reagents, to really work on workflow solutions in the whole area of pharmaceutical, biotech and academic and research, and I'll talk about where we're going in the future. So overall, a very, very good year.

So what are we going to do forward? From an economic environment, the macroeconomy is still quite shaking. I can remember a year ago when we were in New York City, we were quite negative and myself quite negative on the growth prospects in the U.S. and Europe. Many people said that I was being too pessimistic. In hindsight, I think I was too optimistic. The U.S. continues to struggle but will be slightly better. Europe, as you know because of the sovereign debt problems, is worse and technically, they're in a recession again. Recently, you've seen that China has lowered their growth rate. And so overall, the economic environment is uncertain.

Our own personal belief is that 2012 will be a muddle through year. That Europeans will figure out how to delay a debt crisis. The U.S., actually an election year, will probably have more upside and the emerging markets will be growing, but not as robust as they were last year. So overall, I think in 2012, barring an economic problem should be okay.

The good news is, if you look at the macro trends and again, in measurement science, you have to have the tools to capture what are the micro -- the mega trends for the future. We are very, very well positioned. If you look at food safety, environment, energy, communications, life sciences, those are the big markets of the future. In a moment, I'm going to describe to you why we think we are so well positioned in there.

Secondly, we are going to continue to grow and expand our emerging markets. By year 2020, the emerging markets will be bigger than Europe and U.S. and Japan, and we have to win. We have to win in China, in India, Brazil, Russia and the rest of the other countries. In fact, we just opened our first sales office in Vietnam. With a country with almost 100 million people, agriculture, more industry. There's just things that are going on that we can be able to capture that, and as countries become richer, they will put in all the types of infrastructure that you'd see in a developed world.

We'll continue to invest in R&D. We spend more money in R&D than any of our competitors. We spend almost $700 million on R&D, almost 3,000 researches, and I'm actually convinced being a technology leader will in fact help us differentiate ourselves and continue our organic growth rate. And finally, continued focus on manufacturing. Many people don't realize this but manufacturing is really our secret sauce. We own all our manufacturing factories. We have the lowest cost of sales in hardware in the industry, and that really allows us to make the investments in emerging markets, making the investment inside of research and development.

So let me talk about each of these industries. I'll start off with food. And these are all things I know are related to all of us. And so this whole idea of global food chain around the world and the corresponding illnesses that go along with that. I often joke that everybody in the United States wants to have a green vegetable on their plate every day. And as a result of that, you have all kinds of movement of food around the world that results in pathogens and illnesses. In addition to that, in emerging markets we have problems such as food safety and their whole process of food supply chain, and you saw the ones with melamine in infant milk in China, which caused this enormous amount of harm.

So the team and the team in the Chemical Analysis business has done a great job of being the first responder of choice when something happens. And so you do that, first of all, with world-leading technology. Again, #1 market share in GC Mass Spec, which is a very sophisticated detector used to find pesticides. And again, we just introduced an LC/MS Triple Quad, particularly focused in this area in terms of Food Safety. And this one example here is if we have this problem in the Gulf, right? The big oil leak in the Gulf. What is the impact of food in the Gulf? And the team there, again under Mike's leadership, was first there. We brought the equipment down, worked for the government to try to verify what is the safety of the food, what is the safety of the -- all of the contaminants on seafood inside of the Gulf. And everywhere in the world, when we see an issue like that, Agilent is very, very quick to be able to respond to that.

The environment. The environment is all being driven first by emerging market. As these economies go up, what’s the quality of the water, what’s the quality of the -- what's in the soil, what's in the air. And again, we've been a leader in this for years, 10% of Agilent's business. First of all, we've always led with our technology. The first one is Atomic Absorption. This is a product that came from Varian. And they had an idea instead of using a live argon gas of which the sample that go through the gas and you'd be able to detect and you'd be able to see some of the elements that are -- whatever in that sample was, the team knew how to do it with a microwave. Needless to say, we're the world's leader in microwave, and we said go for it, and we introduced a whole new instrument platform that is able to be able to use in a far less easier environment for the customer. You don't need to have a laboratory. You don't need to have a certain sort of source gases. That we’re able to be able to do it just using a microwave. That's an example of the technology that we can bring to the company and to the market that's different.

We introduced also the world's first ICP-MS. And again, this is for elemental analysis. And again, this is all about detecting smaller and smaller, in this case, pollutants, contaminants in the environment, how do we analyze it, how do we in fact allow governments and industries to be able to react to that. And again, a great example here is the work that we're doing in the University of Arizona with Dr. Snyder that is looking at contaminants in the water. And as you know that not only do we have the normal contaminants in water, with an aging population, people are taking pills, people are taking drugs and they got to go somewhere, right? And is that -- what is happening, what are these contaminants that you're seeing inside of drinking water moving forward? We are a leader in that area to be able to understand what those affects are.

Energy, 13% of the company. And again, this has just been a huge boom for us. Another example of Agilent being able to capitalize on growth opportunities. Again, this is being driven by emerging markets, all of us know what the price of gasoline is, essentially being driven by the demand for automobiles in China, India, Brazil moving forward. Most of it is still fossil fuel based. We are a leader in that area. Not only to measure the octane in and whatever the gas tank is, but includes the research, the development and again, all of the refinery process control that one would have as you put on this capacity around the world.

Again, a real leader in terms of technology in that area. In fact, I actually visited this site in China, where we had 68 of our GCs. These are just huge ethylene plants. China is creating this enormous amount of processing capability and Agilent is the choice. What's interesting here is this Cary 630 is a very small FT-IR spectrometer that is able to do very, very quick measurements, and I'll give you 2 examples. First, I don’t know if many of you know it, in biodiesel, there's a big algae field off Treasure Island, right here in San Francisco and Oakland, and they're actually growing algae, and they're going to make into biodiesel and in fact Lufthansa and some of these other airlines are actually going to use it. I'm not quite sure how viable this is, because I think it's about $8 or $12 a gallon, but nevertheless, they're using that. And this type of device, actually in the whole biofuel, it's very, very easy to quickly measure exactly how is the composition going. The second thing it does very well is to be able measure the difference between water and oil. So all of you who are worried about an oil spill in your driveway can buy one of these and then you can in fact analyze exactly how much oil or water that you have.

Communications. Communications is 18% of the company. And I always put this whole area of mobility, and I always use the analogy in this case. What's it going to take to be able to have your child or grandchild watch high-definition TV in the back of the car on their iPhone when you're driving 65 miles an hour down the freeway? It is a nontrivial technical issue to be able to bring that much data at that data rate moving forward.

It is an enormous amount of technical challenge. Some of you know that I used to be an old optics guy before I moved over into RF and microwave, and I never thought that they would be able to get the bandwidth on the existing wireless infrastructure. This is enormous opportunity for the company. We are a leader in this space, and this whole LTE, which is Long Term Evolution, is the next generation of getting more bandwidth through a very narrow and actually low frequency -- data frequency range to be able to get more data to your mobility. I think this trend is going to continue moving forward.

Secondly, the real growth in terms of new subscribers are in the emerging market. China, for example, in 3G, right now we're all shipping 4G. 3G is just starting in China. Only 100 million people have a 3G phone yet. And so here's the case where Ron's or Guy's organization, in China we have over 200 designers in Beijing working with the infrastructure, China Mobile in China to be able to support their standard and their implementation of this type of mobility.

So again, we have the broadest spectrum of products, a leadership position, and one that I think is going to be able to run out for many, many years.

And finally, but not the least, is our effort in Life Sciences. Actually, today, between Big Pharma, biotech and academic and research, 22% of the company is in Life Sciences. I'm going to share with you and maybe some of you in this room would agree, I am really interested in the progress in Life Science, understanding disease, preventing disease and increasing the quality of life moving forward. And over the last 7 years, we have put together a portfolio of products from our core measurement technology, through robotics, through reagents, to be able to provide workflow solutions in the area of genomics, proteomics and metabolomics. And I have had the privilege to be able to visit every, almost every top university in the world, and we really have a credible story between our labs, with Darlene and again, with Nick's business in Life Science. We are credible in Life Science. It's probably the biggest change since 2005 in terms of how we're seen.

Clearly, you've got to start with the instrument. Again, this is 10x the sensitivity. It's called a Q-TOF, which is time of flight, basically that big tower, the ions go up and down. You try to separate -- you just try to separate the molecules and essentially be able to get higher and higher resolution when this thing hits the, potentially a photomultiplier tube at the detection side.

And here's an example in The Netherlands, where we provide all of the automation, all the software, all of the reagents to do what's called sample preparation in terms of sequencing. So you take your genome, you want to -- we'll look at a part of the genome, we provide all of the capabilities that the scientists when they go to the sequencer could really understand what they see.

Huge ramifications of understanding disease, prevention of disease and, of course, reacting to people that do in fact have genetic issues.

So I'm incredibly excited about this and again, we'll continue to use this as a focus. But hopefully, and as you can see, that we have a great position in electronic measurements and communication, great position in food, energy and the environment in Chemical Analysis.

So in closing, we are well positioned for 2012. The company has never been stronger financially. We have a great product strategy, and we have a great team. We're also absolutely committed to continue to return value to the shareholder. I think we have demonstrated that over the last 7 years, and we're continuing to do that. And again, our focus on capital deployment, invest in the business to make sure your dividend keeps getting paid. And again, we continue to buy back stock so that we do not dilute the shareholder as we move forward.

So with that, thank you very much. What I'd like to do is open it up to any questions that you might have, and please go to either mic #1 or mic #2. You have to go to mic, webcast.

Question-and-Answer Session

Unknown Shareholder

Okay, I have a couple of questions. My name is Shelton Erlich [ph], I'm a shareholder. Are we working here? You spend 10% of your revenues on R&D, which means that you have a very substantial R&D tax credit. In my experiences, and I'm not talking about Agilent, that sometimes people put G&A in the R&D budget and other things that shouldn't be there in order to gain the tax credit. What would you rather have, R&D tax credit or a lower corporate tax rates?

William P. Sullivan

Well, in fairness, probably both. The first thing that I want to make sure Agilent would never have gained anything. And again, you can ask -- we are as clean as they come and the Pricewater folks can verify that. So we would never do that at all. I mean, when it comes to uncompromising integrity, which is the foundation of this company in 1939, we have never ever deviated that. Secondly, tax credits to encourage investment is a choice that the government makes on how they want to allocate their resources. Many countries, in fact, encourage additional investment in their country. And I support that, but again, I'm one vote out of hundreds of millions, right, in that area. In terms of the tax rate, I believe that the existing U.S. corporate tax rate is highly flawed. And I don't understand why $1 trillion of U.S. company money is trapped overseas, and you're basically being telling American companies to invest outside the United States. I personally don't understand that, and so I do fully support comprehensive tax reform in the United States.

Unknown Shareholder

You've led into my second question. Because of the recent Supreme Court decision, Agilent could spend money on politics. On the repatriation issue, are you planning and planning maybe with others to organize a campaign of advertising and agitation to change that repatriation tax rate?

William P. Sullivan

No. From a PAC standpoint, the answer is no. Agilent has made the decision that we will not have a PAC. We will not pay for lobbying in Washington. We have made that as a corporate decision. Myself outside of this issue have never taken a public position. Because it really affects the employees as well. Employees have different points of view, and I think our job is to focus on our customer and on our markets. Saying that, in Silicon Valley, there is a group that has gotten together. We're part of that group and has stated our case in the valley that there should be comprehensive tax reform moving forward. Unfortunately, that has fallen mostly on deaf ears. So I think from a valley position, we have been very, very clear. We have given no money to do anything beyond that. Go ahead.

Unknown Shareholder

My name is Richard Collins [ph], I didn't plan to say anything, but you reminded me yesterday, for example, almost all the clouds in the sky were a result of contrails. Have you thought of any way that you can make money by analyzing what's going on up there?

William P. Sullivan

Well, actually we do have the capability of analyzing -- we can analyze air moving forward. And I'll put an aero [ph] plug in this whole issue of global warming and all the rest of what's that going to go. I think someday somebody's going to come up with a idea of how to change it man-made, which will be a very interesting political debate. We have that -- we have capability to, in fact, do that, but there's probably more -- it's a much more generic outcome of our core instrumentation platform than a key strategic measure.

Unknown Shareholder

Good morning. I am Bob Stewart [ph] from Los Altos. When I read EDM and see the edge from Agilent, I see very large dollar figures on the products that you sell. One of the things I do is frequently need a very small portable scope that I can carry along in my pocket, battery-operated with maybe 3 to 5 gigahertz capability. And I'm wondering, wouldn't that be a reasonable market to go into if you can keep the price low enough people can afford it?

William P. Sullivan

That's a great question. Highly debated for all of us moving forward. Last year, we introduced the largest product family in our history called the Jackal, our original codename was Jackal where we now have a technology from $1,000, of course up to $300,000. So we actually, at the $1,000 level, have something that you're talking about moving forward. And if you want one, Guy Séné is the guy over here to able to talk to. In terms of the $500, $300 to $500 that you see in a lot of the electronics, at this point in time, we have not moved in that market. There are couple of issues. One is how much money you can make. But even more importantly, the channel is really quite differently. If you go into a Fry's Electronics in the Bay area, you can see a whole spectrum of products moving forward. Now the flip side of it is and again, it's under Guy's organization, used to be under Soon Chai's, we have entered into handheld market. Again, these are hand-held voltmeters. We actually have some scope capability, so we have that. We tend be higher than the very low end or what somebody, like a hobbyist would be. You really got to have -- go past that moving forward, and so we actually do have that. We more than happy to send you any information regarding that product. And that has been a major change over the last few years.

Unknown Shareholder

Glad to see it. The second issue that I would like to address is about a year ago, an earthquake off the coast of Northern Japan caused a tsunami that caused unbelievable damage all along the coast and resulted eventually in the destruction of 4 nuclear reactors. You see a lot of concern of people in that area about measuring radiation levels. And I'm curious, what I've worried about in the nuclear power field is the likelihood of a terrorist group damaging one of the power reactors in this country. If that were to happen, I should think there'd be large market for radiation detector, a suitable detector at a low cost. And I'm just curious, has the company ever looked into going into that line of activity?

William P. Sullivan

It's a great question. So in terms of radiation measurement inside of produce, soil, we have all that capability. The ICP-MS we talked about is a real workhorse in this whole elementary analysis. Our focus has been in the research lab. We do not have products that are out in the field, the Geiger counter moving forward. And we haven't done that. Again, it's a much different market, a different channel. Our focus has really been to try to determine what is the level of contamination and then how long it's going to last over some period of time. And so again, in Mike's team in Japan, we've been very aggressively to be able to provide instrumentation and how -- so that they could make a long-term assessment of the potential contamination problems for their citizens. But our focus tends to be much more in the analytical sophisticated analysis, not in the immediate field detection, which tends to be quite gross. You see it on TV, the old Geiger counter. Our focus is really on the sophisticated measurement of what type of contamination, radioactive contamination would they have in soil and food.

Unknown Shareholder

Well, I would suggest considering going into the other market as well.

William P. Sullivan

Good, thank you very much. Well, great. Well, thank you all very, very much. Again, I really appreciate all the attendance. And again, there's coffee in the back, and hope to see you again next year. Thank you.

Unknown Executive

As Bill mentioned, Agilent has provided refreshments at the rear of the auditorium where you will also find the exit. Please drive carefully, and have a great day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Agilent Technologies' CEO Hosts 2012 Annual Meeting of Shareowners (Transcript)
This Transcript
All Transcripts