NEW YORK (GenomeWeb News) – Following yesterday's announcement that its third-quarter revenues fell 1 percent and that it would undertake a restructuring, Illumina filed a document with the US Securities and Exchange Commission disclosing that it will cut 200 jobs from its global workforce.
As reported by GenomeWeb Daily News yesterday, the firm expects to record a restructuring charge of $15 million to $17 million, the majority of which will be recorded in the fourth quarter. It expects the actions associated with the layoffs to be "substantially completed" this year.
"These steps are being taken to better align the company's organization and cost structure in consideration of uncertainties associated with academic and government research funding and the global economic environment," Illumina said in the filing. The cuts equal roughly 8 percent of the firm's workforce.
Further details of the restructuring and layoffs weren't disclosed, though company officials said yesterday that the effort would include the formation of a business unit focused on clinical markets.
During the firm's conference call yesterday, Illumina CEO Jay Flatley cited a confluence of factors that led to the disappointing results including the reduced NIH budget, global academic funding concerns, and the launch of the firm's V3 sequencing kits during the second quarter, which resulted in a decrease in consumables revenues per instrument due to reduced runs.
Despite the negative news, Illumina's shares climbed 7 percent to close at $30.80 in Tuesday trade on the Nasdaq. Goldman Sachs analyst Isaac Ro called the rise in stock price "unwarranted," adding "our core view on the business and NIH funding are largely unchanged."
David Ferreiro, an analyst with Oppenheimer, said in a research note that although illumine believs the setbacks are temporary, "[w]e are not as optimistic, and believe researchers will take longer to grow into existing sequencing capacity especially when bioinformatics solutions continue to lag. Moreover, we remain concerned that investors have yet to appreciate [Illumina's] leverage to the declining microarray market."
In early Wednesday trade Illumina's shares were down around 1 percent at $30.63.