Affymetrix's 2Q Prelim Sales Miss - Analyst Blog
July 07 2011 - 7:00AM
Zacks
Genetic products maker
Affymetrix Inc (AFFX) has announced disappointing
preliminary sales for second-quarter fiscal 2011. The
California-based company expects to post revenues in the
band of $64-65 million for the quarter, which is below the
current Street view of roughly $74 million.
Affymetrix’s shares tanked $1.55
(or 19.4%) to $6.45 in after-hours trading on July 6. The company
is expected to report final results for the second quarter after
the closing gong on July 27.
Affymetrix expects product sales
for the quarter in the range of roughly $58-59 million, including
consumable and instrument sales of approximately $55 million and
$3.5 million, respectively. Service revenues are expected to be roughly
$5 million while license and royalty revenues are expected
in the vicinity of $1 million.
The company noted that its second
quarter results were impinged by a decline in sales to its academic
customers across all markets, especially in North America.
Consumable sales clipped 10% year over year in the quarter.
Nevertheless, the company remains optimistic about generating
cash flows of roughly $10 million in the second quarter along with
net cash of more than $155 million.
Affymetrix is a leading provider of
microarray-based products and services to the global research
community. Along with Illumina Inc. (ILMN), it is
one of the two major providers of microarray technologies primarily
used in the field of genetic research.
Affymetrix is broadening its
customer base through new product introductions and strategic
alliances. The company continues to enjoy steady end-user demand
for its arrays. Affymetrix is pursuing a number of strategies
(including expansion into new markets) aimed at expanding its
top line. The
shift in focus to high-growth markets represents a positive
step for future revenue growth.
However, Affymetrix is operating in
an intensely competitive industry and faces risks associated with
lower R&D spending by its customers, notably in Europe, due to
a weak economy and government actions including budget cuts. We
currently have a Neutral rating on the stock.
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