BOSTON, MA - As part of its ongoing strategy to pursue growth markets in health sciences and photonics, PerkinElmer is divesting its Fluid Sciences business segment, starting with the sale of its aerospace business to Eaton Corporation for $333 million. In addition, PerkinElmer is in discussions to sell its semiconductor and fluid testing businesses, and all of the planned divestitures are expected to be completed in the fourth quarter of 2005, with aggregate proceeds of $400 million from the total sale of the Fluid Sciences business segment.
“The proceeds will help us build our growth platforms, with particular emphasis on genetic screening, medical imaging, molecular medicine and service,” said Gregory Summe, chairman and CEO of PerkinElmer. “While expected to be modestly dilutive, about 5%-7% in 2006, the divestitures should reduce our exposure to more cyclical markets and position PerkinElmer to deliver higher revenue and EPS growth.”
According to Dan Sutherby, vice president of investor relations, the divestitures are consistent with the company’s strategic focus that was first implemented in 1998, when Summe joined the company. At the time, the majority of PerkinElmer’s revenues-80%-90%-was from government services. But the board of directors felt that the company needed to shift its resources to stronger growth markets, and Summe has taken this task to heart.
“At the start of 2005, 70% of our business was in health sciences and 30% was in industrial sciences, which then included the specialty lighting, sensors, aerospace, and semiconductor businesses,” Sutherby said. “So 15% of our revenues in industrial sciences was in photonics, the rest in aerospace and semiconductor. And while the latter two were good businesses, they are just not part of our core anymore. Our focus is to be more of a health sciences and photonics company.”
Once the divestitures are complete, PerkinElmer will be a $1.5 billion company, with 80% of its business in health/life sciences and the rest is photonics, including specialty lighting and sensors, Sutherby added. The company plans to make significant R&D investments in both health sciences and photonics, related to those areas it has identified as having the strongest growth potential. For example, PerkinElmer sees good opportunities in sensors for safety/security systems and automobiles. In photonics, the company is focusing on specialty lighting, especially for home theater systems and other consumer electronics products.
“We recently commercialized, and started shipping, the first flash for a camera phone,” Sutherby said. “A lot of the OEMs, such as Samsung and Kyocera, asked us to make a small, advanced, real flash for higher megapixel cameras that didn’t use LEDs (for the flash). And now we are shipping these, mostly in Asia.