NEW YORK, April 26 (GenomeWeb News) - Applied Biosystems today said that organic fiscal third-quarter revenue inched up 1 percent as sales in DNA sequencing and RT-PCR/applied genomics increased and mass-spec and core PCR/DNA synthesis receipts declined.
Total revenues for the three months ended March 31 increased to $455 million from $440 million in the year-ago quarter. Contributing 2 percent to this increase were "favorable foreign currency affects," which gave ABI a 3-percent jump in total third-quarter revenues, the company said.
Broken down by division, ABI said year-over-year revenue from its DNA sequencing business increased 3 percent to $141 million, and receipts from RT-PCR/applied genomics swelled 20 percent to $134 million.
However, year-over-year revenue from its mass spectrometry segment declined 4 percent to $105 million, and receipts from ABI's core PCR and DNA-synthesis unit slid 1 percent to $50 million. Revenue from all other product lines fell 17 percent to $26 million.
ABI said R&D spending decreased in the third quarter to $51 million from $52 million year over year.
Net income in the period grew to $56 million, or $.28 per basic share, from $46 million, or $.23 per basic share, year over year.
Despite the strong earnings growth, CEO Tony White cautioned in a statement that "due to the constrained funding environment, we remain cautious." He said ABI President Cathy Burzik is "focused on new initiatives to drive long-term revenue growth."
He did not elaborate, but BioCommerce Week, a GenomeWeb News publication, recently reported that ABI has begun looking for additional customers for consumables, services, and software to complement its manifold instruments. ABI is looking to several components of its business, notably in its sales organization, to accomplish that task.
"We have an incredible strength in capital equipment sales," Carl Hull, vice president and general manager for ABI's RT-PCR and gene-expression business lines, told investors visiting the company's Foster City, Calif., headquarters during an April 5 junket. "Our real opportunity is to take that core competence and build a shell around it. Consumables represent a big opportunity for us and we are focused on that."
In the statement, Burzik stressed that "we remain concerned about factors that may have a negative influence on future sequencing revenue."
"While we saw in total only slight revenue growth from the prior year, we had double-digit revenue growth in the Real-Time PCR/Applied Genomics product category, driven by increased sales of our biosecurity, human identification, and TaqMan Gene Expression Assay and Low Density Array products," Burzik said. "We also saw a slight increase in DNA Sequencing revenue as a result of increased sales of low- to medium-throughput instruments.
"However, these results were largely offset by a decline in Mass Spectrometry revenue driven by lower sales of the 4000 Q TRAP LC/MS/MS System," she said. "In the prior year quarter, we filled a substantial backlog of orders for this system."
Looking ahead, ABI said revenue for fiscal 2005 will grow in the "low-single-digits" over fiscal 2004. The company said receipts from its RT-PCR/Applied Genomics and mass spectrometry segments "are expected to increase" over fiscal 2004, while revenues from DNA sequencing, core PCR and DNA synthesis, and other product lines "are expected to decline."