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Agilent Technologies Management Discusses Q3 2012 Results - Earnings Call Transcript

The second headwind was in the industrial segment, which declined 10% amid deteriorating economic conditions. We saw more conservative demand from our customers in distribution channels across the industrial markets.

A third headwind was in the environmental markets, which declined 6% amid lower government spending. Finally, Academic and Government research was down 6% while we saw continued softening due to budget concerns. The declines in these submarkets were offset by positive results in other areas. Communications revenues were up 7% over a year ago, reflecting strong wireless manufacturing test demand. Wireless manufacturing growth was driven by smartphone capacity expansion, primarily for devices but also for component manufacturers.

Forensics Markets revenues were up 17%. Strength was driven by increased demand for screening and identification of abused prescription pharmaceuticals and designer drugs. Pharmaceutical and food safety markets also experienced modest growth.

Finally, we saw strong growth in diagnostics, where our acquisition of Dako closed near the end of June. As part of Agilent, Dako's currency adjusted revenue was up 14% over the same period a year ago, and business reported the strongest July in its history. The integration of Dako is proceeding well.

Net result of this market, give-and-take, is that we ended up with 2% revenue growth for the third quarter. Even with Q3's disappointing revenue, our teams continued to leverage the power of Agilent's operating model. Agilent has a number of variable cost mechanisms that we are able to exercise doing economic cycles.

In addition, we are continuing our ongoing process to reduce manufacturing costs throughout the enterprise. Agilent's global fulfillment organization had several initiatives underway to consolidate manufacturing sites, streamline logistics and reduce manufacturing costs. We've been able to react very quickly to the economic uncertainties and we will continue to act conservatively moving forward.

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