), a global genetic products company, reported first quarter fiscal
2012 adjusted (excluding one-time expenses) loss of 6 cents per
share, better than the Zacks Consensus Estimate of a loss of 9
cents a share and lower than the year-ago breakeven situation.
Loss in the reported quarter was $4.2 million (or loss of 6
cents per share) versus a profit of $0.04 million in the year-ago
quarter, primarily due to lower sales.
Revenues dropped 11.5% year over year to $65.2 million,
marginally ahead of the Zacks Consensus Estimate of $65 million.
Sales dropped mainly due to poor consumable sales.
Revenues from products dipped 13.3% year over year to $58.5
million in the first quarter, which included consumable sales of
$53.7 million, down 14.6%. However, instrument sales inched up 2.2%
to $4.7 million. Services and other revenues improved 9.7% year
over year to $6.8 million.
Gross margin fell to 58.1% in the quarter from 63.2% a year ago,
hurt by lower sales. This was partially offset by lower warranty
expense and a decline in excess and obsolescence costs in
inventory. Product gross margin declined to 59.7% from 64.6% in the
Operating loss was $3.4 million in the quarter compared with an
income of $3.1 million, a year-ago. Selling, general and
administrative (SG&A) expenses were 42.8% of sales versus 36.9%
in the year-ago quarter. Research and Development (R&D)
expenses, as a percentage of sales, fell slightly to 20.4% from
22.1% in the year-ago period.
Affymetrix ended first quarter 2012 with cash and cash
equivalents and available for sale securities (short-term) of
$119.2 million, up 45.7% year over year. There were no outstanding
convertible notes at the end of the quarter.
Affymetrix is a leading provider of microarray-based products
and services to the global research community. Along with
), it is one of the two major providers of microarray technologies,
primarily used in the field of genetic research. Affymetrix holds a
leading position in the gene expression products and services
Affymetrix is expanding its customer base through new product
launches and strategic alliances. Moreover, the company is pursuing
a number of strategies (including expansion into new markets) aimed
at expanding its top line. The company entered into a deal with
pharma services major, Almac Group Ltd.in the reported quarter to
distribute Almac's Xcel microarray products globally.
Affymetrix is shifting its R&D focus from discovery and
exploration markets to the faster-growing validation and routine
testing markets. The company reckons cytogenetics and cancer
research as promising areas for expansion, representing market
opportunities of roughly $200 million and $500 million,
The company has realigned its operation into a number of
business units including gene expression, genetic analysis, life
science reagents and clinical diagnostics. The structural changes
are expected to streamline its decision-making process while
improving customer focus and accountability.
Affymetrix has also taken up various steps to stabilize its
expression business. Moreover, the company expects its genetic
analysis and clinical diagnostic business to grow briskly in 2012,
driven by its cytogenetics program and increased traction of its
Axiom genotyping platform. The company recently launched its Axiom
Exome Genotyping Arrays in the market.
We are also encouraged by the company's move to buy
privately-held eBioscience, a global leader in immunology and
oncology flow cytometry reagents. The acquisition will
significantly boost its foothold in the fast-growing immunology,
oncology and translational medicine markets, representing an annual
opportunity nearing $3 billion.
However, Affymetrix is operating in an intensely competitive
industry and faces risks associated with lower R&D spending by
its customers due to a soft economy and government actions
including budget cuts.
Affymetrix is exposed to a volatile funding environment. The
company has been beset by uncertainties surrounding National
Institutes of Health ("NIH") funding. Decline in government
research grants may substantially affect the company's
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