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Affymetrix Reports Slight Increase in Q2 Revenues, Following Earlier Warning

NEW YORK, July 25 - In line with a recent warning that sales of GeneChip products and do-it-yourself arraying equipment has slowed, Affymetrix reported revenues of $49.5 million for the second quarter Wednesday, compared to $45.4 million in the same period last year. 

These revenues comprised a total nine percent increase over the year-ago quarter, and landed at the high end of the company’s revised revenue outlook of between $44 to $50 million. The company issued these figures in June, cutting back on initial revenue projection of between $56 and $58 million. 

But these final revenue figures include $2.9 million in revenues from Affymetrix subsidiary Perlegen, which the company essentially paid itself, as it listed $2.9 million in expenses for Perlegen revenues during the quarter. Without this self-payment, Affymetrix’s revenues for the quarter totaled $46.6 million, up only two percent from the previous year period. 

Affymetrix’s GeneChip revenue, however, increased 18 percent over the previous year’s revenues.  

Company president Susan Seigel said this increase “reaffirms our confidence in the acceptance of GeneChip Technology.” 

Affymetrix earlier said it expected slowed growth in GeneChip revenue amidst uncertainty and erratic ordering patterns in its larger customers, as well as to delays in ordering caused by the replacement program for the company’s defective U74 murine arrays.  

The company also said earlier that it had revised its revenue expectations downward due to the decrease in do-it-yourself arraying equipment caused by a shift among academic users from homemade to prefabricated arrays. 

In releasing its revenues, Affymetrix said this shift to prefabricated arrays, along with increased use of arrays drug development, “are two trends the Company believes will expand its microarray market.” 

During the week, Affymetrix released two new products that target this market, its NetAffx online information resource, a website where customers can draw together information about genes being probed with GeneChips from public and private database; and its CustomExpress array service for custom arrays. NetAffx will also allow users to choose gene probe sets for the CustomExpress arrays, the company said. 

For the quarter, Affymetrix’s expenses increased to $61.8 million compared to $53.2 million for the year-ago quarter. These included R&D expenses of $16.5 million, compared to $13.0 million in the second quarter of 2000, sales, general, and administrative expenses of $22.0 million, down slightly from $23.1 million in the same period of last year; as well as amortization of deferred stock compensation and intangibles totaling $4.8 million, which the company did not have in the year-ago period. 

The company’s losses for the quarter totaled 16 cents per share, slightly wider than Wall Street’s revised expectations of 13 cents per share, according to a poll of nine brokers conducted by FirstCall/Thomson Financial.  

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