NEW YORK, April 25-Applied Biosystems said today that its earnings per share in the third quarter of fiscal 2002 had slid, pulled down in part by sharply slowed demand for sequencing products and equipment.
For the quarter ended March 31, net income for the Applied Biosystems Group was $49.1 million, representing earnings per share of $0.23. For third quarter 2001, net income was $57.7 million, and earnings per share were $0.26.
It has been a "very challenging" time for the company, said Applied Biosystems President Michael Hunkapiller.
Much of the weakness, he said, was attributable to slowed demand for DNA sequencers and sequencing products.
Sales in this segment slipped from $550 million in the first three quarters of fiscal year 2001 to $455 million in the same period this year. This division now counts for only 38 percent of the company's revenue, down from 46 percent in the third quarter of 2001.
Revenues from sequencing instrument sales slumped 35 percent. Sales of the ABI 3700 alone plummeted by 61 percent.
Consumables revenues slid 6 percent for this quarter compared to the equivalent period last year, mostly due to lowered demand from the company's six biggest customers, including Celera Genomics and the Japanese Millennium Project.
"I've revised what makes me happy," said Applera CEO Tony White.
Hunkapiller and White blamed National Institutes of Health funding delays, an uncertain business climate, and weakness in the pharmaceutical market.
Bright spots included a small increase in sales of the company's Sequence Detection System instruments, which climbed by about 5 percent over the third quarter of last fiscal year. Hunkapiller said that during the last nine month period, revenues from this section were up 23 percent over the equivalent period during the previous year.
Mass spectrometry instrument sales were up by 28 percent, led by sales of the API 4000 LC/MS/MS .
Revenues from sources like service contracts, royalties, licenses, and contract research increased 14 percent from $51.6 million in Q3 last year to $58.6 million in Q3 this year.
Hunkapiller said that the company hoped the recent introduction of two high-end second-generation sequencers and mid-range 3100 Avant instruments will help nudge up sequencing instrument sales.
Forecasts for the company's fourth quarter revenue were revised downward to "flat to slightly positive growth," said Chief Financial Officer Dennis Winger. Earnings per share were projected at between $0.18 and $0.21.
Revenue growth for fiscal 2003 is anticipated to be in the high single digits to low teens.
"The change in guidance going forward is a reflection of what's happening currently," said White. "We were surprised to see the basic weakness in our marketplace, we thought it prudent to not create expectations for the Street going forward."
"We think we'll grow next year," he added. "We're coming back, just not the way I'd hoped."
Hunkapiller and White said that the company will hope to see strong growth in the new assay-on-demand service and in SDS instrumentation and services. Mass spectrometry instrument sales are also expected to remain strong.
"We've believe that our whole applied genomic assays business has the potential of becoming the largest part of our overall business," said Hunkapiller.