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CORRECTED: ABI Q3 Revenues Up 19 Percent, But Company Still Cautious About Future

This article has been corrected from a previous version, in which Applied Biosystems' president Michael Hunkapiller was referred to as the CEO, and in which a comment by Dr. Hunkapiller regarding sales of 3000 vs. 4000 series mass spectrometers was incorrectly reported as referring to DNA Sequencers. GenomeWeb regrets this inaccuracy.

NEW YORK, April 26 - Applied Biosystems reported a 19 percent increase in third quarter revenues Thursday, but repeated an earlier warning that growth would slow in the coming quarters due to negative currency effects and a slowdown in demand for its sequencers.

Applied Biosystems reported $439.8 million in revenues, up from $368.1 million for the third fiscal quarter of 2000. Declines in the euro, the British pound, and the Japanese yen against the U.S. dollar reduced these revenues $11 million from their originally expected figure, the company said. 

The company's revenues were hardest hit in Japan, which comprised 20 percent of its third-quarter sales, said Dennis Winger, chief financial officer of Applera, ABI's parent company, in a conference call to discuss the quarterly results.

Expenses also rose to $151.6 million from $121.8 million for the same period in the previous year. This increase included an 11 percent rise in sales, general, and administrative expenditures, to $104.1 million for the quarter, from $93.7 million for the third fiscal quarter of 2000; and a 32 percent increase in R&D expenses, to $47.5 million from $36.1 million in the comparable period in 2000.

The company's earnings were flat, at $57.7 million, or 26 cents per diluted share, the same per-share earnings as the third fiscal quarter of last year. These earnings met Wall Street's expectations, based on a survey of 19 brokers conducted by FirstCall/Thomson Financial.

The company reiterated that continuing currency declines and other factors would contribute to its already-diminished expectations for revenues in the coming quarters, which ABI warned March 21 would only increase by 10 to 13 percent, or half its long-term goal of a 20 percent growth rate.

"We continue to be concerned about the next two quarters," said Winger.

Michael Hunkapiller, ABI's president, said that revenues would suffer as companies postpone orders to wait for the 4000-line of mass spectrometers to become available at the end of the calendar year. "We saw people defer orders of 3000 [mass spectrometers] the moment they saw the 4000," Hunkapiller said. Sales of 3000-line mass spectrometers also have diminished as they have become less competitive at current prices, Hunkapiller added.

Additionally, Hunkapiller noted that it was "tough" to maintain the growth rate it attained during the "genome frenzy" last year.

Hunkapiller predicted, however, that a "recovery" in the company's flow of orders for mass spectrometers and sequencers would begin at the end of the calendar year, or during the second fiscal quarter of 2002.

During this period of slower growth, ABI plans to restrain its operating expenses, said Winger. But "R& D spending is not coming under the knife any time soon," Hunkapiller said.

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