Sponsored Links 
Affymetrix Posts Higher Loss
Print
ShareGenetic product maker Affymetrix Inc. (AFFX) announced second-quarter 2010 earnings after the closing bell on July 21, 2010, with an adjusted net loss per share of 10 cents exceeding the Zacks Consensus Estimate of a loss of 7 cents. The adjusted loss excludes a $17 million (or 2 cents a share) one-time gain on repurchase of convertible notes.
The California-based company posted a net loss of $5.5 million (or 8 cents a share) as against a net income of $7.3 million (or 11 cents a share) in the year-ago quarter. The weak result is attributable to lower revenues from product sales and services.
Revenue Analysis
Revenues dipped 12% year-over-year to $71.7 million, but was in line with the company’s recently updated forecast of $71–$72 million. Sales were hit by delayed capital equipment purchases by Affymetrix’ academic research customers, notably in Europe, and unfavorable foreign exchange swings.
A beleaguered operating backdrop in Europe is affecting Affymetrix. The company’s European business has been hurt by lower spending by academic research organizations, impacted by government actions (such as budget cuts) to address surging debt levels and weak currencies.
Product revenues fell 3% year-over-year to $65.1 million as higher sales of DNA products (up 7%) was more than offset by lower RNA revenues (down 9%). Instrument revenues of $4.5 million reflect a 10% annualized decline. Service revenues slid 61% to $4.7 million, severely hit by the aggressive competition of large genotyping projects.
Margins
Gross margin rose 3 percentage points year over year to 57% with product gross margin increasing to 57.7% from 55.5% in the year-ago quarter. Margin improvement was driven by effective cost management and the completion of manufacturing consolidation, which have facilitated the reduction in product costs.
Financial Condition
Affymetrix exited the first half of 2010 with a sound balance sheet with cash and cash equivalents increasing 5% year over year to $77.2 million. The company has deleveraged its balance sheet in the second quarter having bought back roughly $26.7 million of its 3.5% convertible notes, which trimmed the outstanding convertible debt balance to $220.5 million from $247.2 million in the previous quarter.
Outlook
Affymetrix has not divulged any updated revenue outlook for the remainder of 2010 given the foreign exchange headwinds and uncertainties related to research funding. However, the company expects to be cash flow positive for the remainder of fiscal 2010.
Affymetrix is a leading provider of microrray-based products and services to the global research community. It is one of the two major providers [along with Illumina Inc. (ILMN)] of microarray technologies. The company is broadening its customer base through new product introductions and strategic alliances. However, Affymetrix is increasingly being challenged by competitive product offerings that leverage advanced technologies.
Read the full analyst report on AFFX
Read the full analyst report on ILMN
Loading Stories...
-1.68 %
