Hewlett-Packard Co. filed Monday to sell stock in its Agilent Technologies Inc. medical equipment and electronic measurement business, in what is expected to be among the biggest U.S. initial public offerings ever.
HP also reported a 37% rise in quarterly profit, beating Wall Street forecasts.
Agilent, which is being split off from the main businesses of the world's No. 2 computer maker, filed with the Securities and Exchange Commission to sell common stock. The filing didn't disclose how much of the company will be offered to investors or how much the IPO hopes to raise.
Businesses included in the Agilent unit, with fiscal 1998 sales of almost $8 billion, accounted for almost 17% of total revenue at parent HP, which has a market value of almost $112 billion.
Conoco Inc.'s $4.4-billion IPO last year was the biggest ever by a U.S. company, followed by Goldman Sachs Group Inc.'s $3.7-billion offering in May. Last month, United Parcel Service Inc. filed for a first-time stock sale that analysts said could raise about $3 billion.
Palo Alto-based HP's shares have risen more than 60% since early March, when it announced plans to split into two companies. The shares rose $4.25 to close at $110.25 Monday on the New York Stock Exchange.
The IPO is part of a plan to let HP sharpen its focus on computers and printers, where growth has been slowing. The spinoff will let Agilent, billed as the world's leading provider of test and measurement solutions, focus on the communications and life sciences fields.
"The key for this company is regenerating growth," said Phil Rueppel, analyst at Deutsche Banc Alex Brown. The company has a good opportunity to do that because its customers in the semiconductor and other industries are rebounding and Asia shows signs of coming back from its two-year slump, he said.
Agilent said some of its businesses in the past have sold products to HP, which will not be required to continue buying from Agilent after the IPO. For example, Agilent said that 34% of 1998 sales at its $1.6-billion-a-year semiconductor products business came from sales to HP.
The IPO comes amid growth in demand by the three customer groups that use Agilent's products: communications network equipment manufacturers; electric component and equipment manufacturers; and semiconductor manufacturers, the filing said.
Underwriters for the stock sale will include Morgan Stanley Dean Witter and Goldman, Sachs & Co.
Meanwhile, HP said it earned $853 million, or 81 cents a share in the fiscal third quarter ended July 31. That was up from a profit of $621 million, or 58 cents a share, in the same period last year.
Excluding one-time costs of separating into two companies, HP would have earned 85 cents a share, handily beating the 80 cents a share expected by analysts surveyed by First Call/Thomson Financial.
Revenue rose to $12.23 billion, from $10.98 billion in the year-ago quarter. HP cited a 12% increase in sales of computer and imaging products, buoyed by strength in Unix business computers, desktop machines, scanners and printers.
The results were released at the close of financial markets Monday.
"It's another quarter of consistent results for HP," said Art Russell, an Edward Jones analyst in St. Louis who rates the shares "buy." That's an achievement because, in the past, "they've been pretty unpredictable," he said.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Hewlett-Packard, which Monday announced quarterly earnings and details of its Agilent Technologies spinoff, has seen its shares surge 61% this year after more modest gains in 1998. Monthly closes since 1995, and latest: