Affymetrix Profits, Misses Sales - Analyst Blog
April 28 2011 - 3:03PM
Zacks
Genetic products maker Affymetrix Inc (AFFX)
has turned in a
modest profit in first-quarter fiscal 2011 helped by lower
costs, which offset a decline in its
top-line.
The California-based company posted a profit of $39,000 (or
break-even earnings) in the quarter versus a net loss of $9.6
million (or 14 cents a share) a year-ago. The results were in line
with the Zacks Consensus Estimate.
Revenues
Revenues clipped 8% year over year to $73.7 million, missing the
Zacks Consensus Estimate of $75 million, hit by lower product
sales. Produce sales dipped roughly 8% year over
year to $67.5 million as the company witnessed declines
across consumables (down 5% to $62.9 million) and instrument sales
(down 36% to $4.6 million).
Service revenues edged up 1% year over year to $4.5 million
while royalties and other revenues fell 23% to roughly $1.8
million.
Margins and Expenses
Gross margin rose to 63.2% from 58.8% a year ago,
supported by
a decline in costs. Product gross margin increased to 65%
from 61% in the prior-year quarter. Consolidated costs and expenses
fell roughly 15% year over year to $70.6 million as R&D and
selling, general and administrative expenses declined 12% and 13%,
respectively, in the quarter.
Balance Sheet
Affymetrix ended the quarter with cash
and cash equivalents of $29.6 million, down 61% year over
year, with outstanding convertible debt of roughly $95 million
(down 61% year over year).
Outlook
Affymetrix has not issued any specific financial targets for
fiscal 2011. The company is pursuing a number of strategies
(including expansion into new markets including cytogenetics and
cancer) aimed at expanding its revenues, a top priority for the
company in 2011. The company targets generating at least 25% of its
sales from new markets in 2011.
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.
During the first quarter, the company broadened its Axiom
genotyping platform with the launch of the Axiom Genome-Wide CHB 1
Array for studying disease and characterizing the genetic
basis of the
disease in the Han Chinese.
Moreover, Affymetrix launched the GeneChip miRNA 2.0 array,
geared to advance gene expression research by expediting the
identification of biomarkers and gene expression signatures associated with
the disease.
However,
Affymetrix is operating in an intensely competitive industry, which
is characterized by rapid technological changes and evolving
market needs. We are currently Neutral on the stock.
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