At the 2015 Mobile World Congress Ron Nersesian, president and chief executive officer, Keysight Technologies updated Microwave Journal on the company’s transition to a separate electronics measurement company and its focus on future development and growth.

Nersesian began his career in 1982 with Computer Sciences Corporation as a systems engineer for satellite communications systems. In 1984, he joined Hewlett-Packard and served in a range of management roles during his tenure.  In 1996, Nersesian joined LeCroy Corporation as vice president of worldwide marketing. He assumed other senior management roles through 2002 at which time he joined Agilent Technologies as vice president and general manager of the company's Design Validation Division. In 2005, he was appointed vice president and general manager Agilent’s Wireless Business Unit and manager of the company’s Santa Rosa, California site. In 2009, Nersesian was named president of Agilent's Electronic Measurement Group.  He became president and chief operating officer of Agilent Technologies in November 2011. In September 2013 when Agilent announced the separation of its electronic measurement business, Nersesian was appointed Keysight president and CEO and led the launch of the new company.

MWJ: For the first fiscal quarter ended January 31 2015 Keysight reported revenues of $701 million and GAAP net income of $70 million or $0.41 per share. How do you view this performance?

RN: I was very pleased with our performance. Not only did we separate from Agilent and keep all of our customers happy and our systems running, but we also achieved revenue and operating profit performance above the mid-point of our guidance.

MWJ: What are your projected forecasts for the second quarter?

RN: In the second quarter we are projecting revenue between $720 million and 760 million and non-GAAP earnings per share between $0.56 and $0.70.

MWJ: Shareholders and economists seem to be satisfied but what about established customers? Will they have seen any tangible benefits arising from Keysight’s formation as a new company?

RN: We are very early in the game, but I think the enthusiasm and focus of all our employees is evident, and customers have seen the result with new products being introduced such as our latest PXI network analyzer, which has received numerous awards.

MWJ: When we talked at Mobile World Congress last year you said, “My goal is to keep R&D investment as strong or stronger than it currently is.” Have you been able to achieve that goal?

RN: Yes, in the past we had run R&D at 12% of revenue and we have made a commitment to increase R&D to 13% of revenue. That is what we did for Q1 and what we intend for the rest of the year. This additional investment will help us grow more quickly.

MWJ: Technologically which sectors in particular do you currently see as being ripe for R&D investment?

RN: We have three main areas that we are enhancing to give our customers better solutions. The first is in wireless solutions, the second is in modular products, and the third is in overall software. These three areas will see the benefit of our increased R&D investment.

MWJ: Is there a balance to be struck between investing in the advancement of innovative technology and investment in ‘lower-end’ technology that has the potential to yield greater profits?

RN: We are investing to make sure that we continue to be market leaders in high technology products but also we want to make sure that we give very cost effective solutions for mainstream products. We are constantly looking at the balance between those two investment cycles – investing for the very long-term breakthrough while also providing cost effective solutions for today’s problems.

We look at what customers are asking for today and what they say they want in the future and make tradeoffs to try to balance those two criteria. For instance, we need to provide them with the solutions that they need not only for LTE but also for LTE Advanced, while simultaneously investing in 5G, which is more long term.

MWJ: At this year’s Mobile World Congress Keysight has a dedicated 5G booth. Please explain this specific focus on 5G?

RN: We intend to be leaders in 5G. We plan to invest more heavily in the overall development cycle of 5G even earlier than we did for 4G. Our singular focus on electronic measurement will enable us to make sure that we achieve that goal.

MWJ: Earlier this week I visited the China Mobile Booth and saw a 5G demonstration in conjunction with Keysight. Are alliances with companies such as China Mobile important and how significant is the Chinese market to Keysight?

RN: Alliances are very important. Our strategy is to work with the market makers and the market leaders. If we can solve the needs of those that are first to market then we can also be successful with the companies that follow. So, we try to identify folks that lead technology areas, partner with them and then bring those solutions to market. As a matter of fact we sit on many standards bodies in order to make sure that we are at the first phase of technology as it is developed.

With respect to China – it is a very important market for us and represents roughly 20% of the company at just over $600 million.

MWJ: Looking back to when we talked last year, did the transition to Keysight go as planned and do you believe Keysight has its own identity?

RN: We are ahead of where we expected to be at this point. The transition has been very smooth. All of our systems and processes worked well. Our name and branding has been developed but, of course, we realize it will take a continued effort over time to make sure that everybody is aware of Keysight and that it has the reputation that we had when we were with Hewlett Packard.

We would like Keysight to be thought of as a solution company that not only has the best hardware but also tremendous software, along with the best people to enable customers to create insights quicker than with any other methodology. So, we would like people to associate Keysight with gaining key insights to problems faster than with any other mechanism – offering elements of speed, confidence and total solutions of software, hardware and experts.

We know that to be successful it takes hardware, it takes software and it takes expertise. You need all three – we believe we have the best experts in the field and divisions that are focused. We have built our software business to over $300 million but we believe there is even more we can do and we are going to continue to invest in having the world’s leading technology as well as cost effective solutions for the mainstream markets. When all three of those pieces come together we think they are the key to getting insights.

MWJ: Going forward what would you say are the greatest challenges facing the company and how do you plan to address them?

RN: The greatest challenge is to accelerate our growth and we are doing that through increased R&D investment and a greater focus on the total organization while staying extremely close to customers and being very responsive to what they are asking for. There will be speed, focus and investment in order to make that happen.

From a company operating perspective we had multiple divisions with bottom-up plans. It is important to have a balance between bottom-up and top-down planning. For example, we are making strategic decisions to operate all of the same software platforms to go with one modular standard versus multiple modular standards. To accelerate this approach we are integrating our plans so that while each of our divisions remains responsive to their customers, we are creating common architectures for speed and customer usability across the company.

MWJ: What is your general perception of the transition to Keysight Technologies?

RN: Separating into a new company could create a lot of uncertainty for employees, but instead I am so gratified that our employees are extremely excited about the separation and our complete focus on the electronic measurement market. Typically, these are people who have worked for 10, 20 or 30 years in this market, but realized that Agilent had other objectives outside the electronic sector. The response that I received regarding the separation has been 99 percent positive.

I’ll give you an example. Over the last five years Agilent spent approximately $4 billion on acquisitions. Half the money was generated by electronic measurement, while the other half was generated by our life sciences and analytical business. Of that $4 billion, roughly $3.9 billion was spent building our life sciences and analytical business. That is great for that business, but there are opportunities in the electronic measurement business that we will go after now and be able to strengthen our growth.

When asked about possible future acquisitions Nersesian commented:

We are looking at all ways to add value and develop through both organic and inorganic growth.