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UPDATE: Affy Cuts Q2 Revenue Outlook on Lower Sales of GeneChips, Spot Arrayers

This story has been updated from a previous version.
NEW YORK, June 11 - Affymetrix said Monday it was reducing its second quarter revenue forecast to between $44 million and $50 million, down from a previously expected $56 million, citing lower than expected orders of GeneChips and a drop in the demand for spotted array instrumentation.
"The nascent state of our market combined with variable economic conditions and rapidly changing dynamics affecting our largest customers have made it challenging to accurately forecast growth," Stephen Fodor, Affymetrix CEO, said in a statement.
"Despite the current slowdown, our customers increasingly tell us that GeneChip technology is rapidly becoming an indispensable tool for scientific discovery as well as drug development. Thus, we remain highly optimistic about our longer-term financial prospects," Fodor said.
Affymetrix attributed the drop in revenue to the economic uncertainty and to more sporadic ordering from its larger customers. However, Affy said that demand for the GeneChip products had not been affected in the academic and biotech sectors.
In addition, Affymetrix is also suffering ongoing setbacks stemming from its defective U74 murine chips. Recently, the company began replacing the chips on a one-for-one basis, however, some users have complained that the replacements were not enough to compensate for the additional expense of the wasted reagents and the time that went into doing faulty experiments.
Some researchers have said that their projects were delayed a month because they needed to replace the arrays.
Affymetrix disclosed in early March that its three-chip U74 murine set contained incorrect sequence on 25 to 60 percent of the genes, and told customers it would ship replacements within six weeks.
Affymetrix of Santa Clara, Calif., previously said it expected to lose $15 million to $20 million in revenues as a result of the defective chips.
Affymetrix also said that a shift in user preferences to pre-synthesized arrays from do-it-yourself arrays hurt sales of their spotted array instrumentation.
The company said it would not reduce its R&D spending as a result of the lower earnings forecast, noting that this would hinder growth in the long-term.
Affymetrix expects 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's expects a loss of 7 cents a share to 12 cents a share. Wall Street expected the second quarter loss to come in at two cents a share, according to a poll conducted by First Call/Thomson Financial.
Some $3 million to $4 million in second quarter revenues will come from Affymetrix subsidiary Perlegen Sciences.


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