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ABI Warns that Economic Downturn May Impede Short-Term Growth

NEW YORK, March 21 – Applied Biosytems said Wednesday that the current economic uncertainty and a stronger dollar could negatively impact its growth prospects for the near term.

“With the uncertainty created by current economic conditions, we see some modest softening in the current quarter, and the order pattern as we see it today suggests that in the subsequent few quarters our short-term growth rate may be one-half to two-thirds of our long-term target,” Michael Hunkapiller, president of Applied Biosystems, said in a statement.

Hunkapiller also noted that the dollar's renewed strength over the last two months against some major foreign currencies had further clouded the company’s near-term outlook. A stronger dollar weighs on revenues booked outside the US.

Hunkapiller noted, that the long-term outlook remained strong and stable, with the Foster City, Calif.-based company positioned to grow at a compounded rate of 20 percent.

While Applied Biosystems derives more than half of its revenues from publicly-funded facilities, which are continuing to receive funding, Hunkapiller said that the company was concerned about potential spending cutbacks by pharmaceutical and other commercial customers.

"Although most of our commercial customers have substantial financial resources, we have seen some shipments of instrument systems delayed due to economic and market uncertainty, and it is possible that these factors may influence the near-term buying patterns of other commercial accounts,” Hunkapiller said.

Hunkapiller did not disclose the names of any companies that had indicated they would be scaling back orders.

On Wednesday, Reuters reported that Genaissance Pharmaceuticals delayed the installation of 35 Applied Biosystems’ sequencers.  

However, Genaissance said the decision did not reflect the downturn in the economy. Rather, the decision came as the result of improved consumables that had helped the company to improve the efficiency of the 59 sequencers it had already received.

"What people don't understand is we have 59 sequencers and we have put many decisions on hold because ABI has supplied us with a fantastic solution to enhance throughput," said Genaissance spokesman, Paul Oestreicher. "In some cases we have seen a 50 to 100 percent increase in the efficiency in the machines." 

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