The company expects 300 jobs will be lost mostly within the next 12 months. The majority of the affected positions are located in Yarnton, UK, and Santa Clara, California.
It will stop taking new NMR system orders immediately, but will continue to meet customer commitments for orders in progress and ongoing support contracts and continue to provide service on all installed NMR systems.
Decision to drive profitability
NMR is used to study authenticity, adulteration, spoilage, origin, processing and process control, and uniformity of raw materials and products.
However, NMR spectroscopy is less sensitive than some other analytical methods, so is not normally used to analyze trace contaminants within mixtures, such as quantifying pesticides in food.
Mike McMullen, president and chief operating officer, and CEO-elect, said it was a difficult decision that was needed to drive improved profitability.
“The NMR team has been extremely dedicated and has made many excellent contributions,” he said.
“However, this action is a step in ensuring that our investments are placed on higher-value life sciences, applied markets and diagnostics solutions that will continue to drive growth across the company.”
Restructuring and affected revenue
Agilent will take a $72m restructuring charge in the fourth quarter.
It expects a $20m to $30m decline in revenues in fiscal year 2015 due to the NMR business closure, but a positive impact of about $10m in operating profit in FY15.
Agilent entered the NMR business in 2010, with the acquisition of Varian.
The move is part of Agilent’s strategy to address the business shortfalls of its Research Products Division.
Agilent announced its exit of the OEM and Specialty Magnet business in early 2003 and then the MRI business to focus resources on the core NMR portfolio.
Despite this, the NMR business has continued to fall short of growth and profitability objectives, said the firm.
For the fourth quarter of 2014, Agilent anticipates non-GAAP earnings per share of $0.87 to $0.91, and projects revenues to be negatively affected at about $13m, and lower NMR-related revenues by about $12m.