good business, take the proceeds, and redeploy the capital into the remaining businesses.
I think one of the criticisms of PerkinElmer in the past is that it’s a little complex from an end-market perspective. I think this reduces the complexity, reduces the number of end markets we’re in. I think we’re a more pure play than we were before.
X: How do you want the company to be portrayed?
RF: How we’ve portrayed the company in the last 18 months is as a human and environmental health company. With the IDS sale, we’re about 50-50 in those markets, so I feel good about that split. I just think that the IDS business wasn’t tightly aligned with those end markets, so it gives us a tighter focus.
I think from the innovation community, we want to be viewed as a global technology company, leading innovation. But I don’t want it to be innovation for purposes of interesting science. I want it to be innovation that really meets the needs of our customers, so I really want it to be application-specific. And that’s one of the other things we’re trying to do in the company right now is make sure that the products and technologies we develop, it’s really well-understood which customers and which applications its going to go into.
X: Does this deal signify that PerkinElmer wants to become a leaner operation?
RF: No, I don’t think so. If anything, we want to grow and become a larger organization. I think of it as a capital allocation. We want to reallocate some of our capital from one kind of business into another type of business. So our clear preference is to take the proceeds from IDS and acquire additional businesses. I would hope that twelve months from now PerkinElmer is a larger entity, not a smaller entity.
X: How do you plan to spend the cash your company is getting from this deal?
RF: I think it’s going to go back into the businesses that remain. I think we like all the businesses that are left. We have some preferences. I think that when we look at the markets that remain after we sell IDS, it’s fundamentally three customer markets. It’s diagnostics, pharmaceutical/biotech, and environmental—which would be broadly defined to include not just air and water but also food and consumer products. We feel that all of those end markets are very attractive, and we feel good about our core capabilities in those markets. But I would say that we probably put diagnostics a little ahead of the other two. I think we like the characteristics of the diagnostics market a little more; it seems to be a little less cyclical and higher growth than others.
X: What makes diagnostics a high-growth market for PerkinElmer to be in?
RF: As you think about rising healthcare costs, one of the ways to reduce the rate of increase is to identify diseases earlier. I think it’s been proven in a number of studies that the earlier that you can diagnose or detect a disease, first of all, the better the outcome, and the cheaper the treatment for the disease. So we think that there’s going to be a larger percentage of all healthcare dollars spent on trying to diagnose diseases earlier. The tests have to get more reliable, and that comes down to sensitivity of the diagnostics and also finding new biomarkers, to find the relationship between the things we find in the body and diseases.
X: Do you think the worst of the recession is past us? Why?
RF: I do think that the worst is
