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Affymetrix Shares Plunge Following Revenue, Earnings Warning

NEW YORK, June 12 – Affymetrix stock was down $14.10, or 34 percent, at $26.85 in afternoon trading on Tuesday, following an announcement on Monday after the close of trading that the company was slashing its second quarter revenue expectations.

The company said its revenues for the quarter would total between $44 million and $50 million, a drop of between $6 million and $14 million from previous estimates.

Affymetrix also said that it expected to report a net loss for the quarter of $4 million to $7 million, excluding non-cash, acquisition-related charges. Based on 57.6 million outstanding shares, the company expects a loss of 7 cents to 12 cents a share. Wall Street had expected the second quarter loss to be two cents a share, according to a poll conducted by First Call/Thomson Financial.

James Reddoch, a Banc of America Securities analyst, reacted to the news by cutting revenue expectations for the second quarter to  $46.3 million from $57.5 million and dropping the full-year revenue estimate to $219.7 million from $259.8 million. Reddoch downgraded his recommendation from “buy” to “market performer.”

During the Monday evening conference call, Affymetrix president Susan Siegel attributed the lowered revenue estimates to “erratic ordering patterns from certain [large] GeneChip accounts.” Siegel also said “the current economic climate had created a challenging business environment for selling into the research departments of some key pharmaceutical companies.”

Siegel also pointed to the replacement of the defective U74 murine assays, first disclosed in March, as contributing to decreased revenue expectations. Affymetrix predicted that it would lose $15 million to $20 million in revenues as a result of the replacement program.

Other genomic shares followed Affymetrix’s drop. By midafternoon Tuesday genomic technologies stocks were broadly lower, with Applied Biosystems down 4.7 percent, Incyte off 3.5 percent, Ciphergen Biosystems down 5.5 percent, and Celera trading 4.0 percent lower. The Nasdaq Biotech Index and the Amex Biotech Index were down 2.9 percent and 3.3 percent, respectively.

Affymetrix’s share price has ranged between $23.25 and $103.75 per share over the past 52 weeks.


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