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Affy's Q3 Revenues Fall 21 Percent, Restructuring Charges Contribute to Loss

NEW YORK (GenomeWeb News) - Affymetrix today reported a 21 percent falloff in third-quarter revenues, as restructuring charges helped cause a profit in the year-ago period to swing to a loss.   
 
For the three months ended Sept. 30, Affymetrix reported total revenue of $75.2 million, compared to total revenue of $95 million in the third quarter of 2007.
 
The company warned of the decline earlier this month, noting that it was due to “increased competition for academic research funding and continued softness in industrial spending.”
 
Third-quarter product declined 5 percent to $66 million. Arrays and reagents generated $59.8 million and instruments generated $6.2 million for the quarter.
 
Service revenue declined 4 percent to $6.1 million, while and royalties and other revenue fell by nearly 80 percent to $3.1 million for the third quarter of 2008.
 
Affy said it shipped 29 GeneChip systems in the quarter, bringing its total systems shipped to 1,790 as of the end of the third quarter.
 
Third-quarter R&D spending rose 26 percent to $20.7 million from $16.5 million; while SG&A expenses decreased nearly 15 percent to $28.4 million from $33.3 million.
 
Affy reported a net loss of $31.8 million, or $.46 per share, compared to net income of $2.6 million, or $.04 per share, in the comparable period of 2007.
 
The current quarter’s loss includes a pretax restructuring charge of $14.6 million, while the year-ago period includes a pretax restructuring charge of $5.7 million.
 
Affymetrix said it expects its fourth-quarter revenue to be “essentially flat” to third-quarter levels. The company anticipates total revenue for the year to be in the range of $408 million to $415 million, including a $90 million payment it received from Illumina in the first quarter. Affy generated $371.3 million in full-year 2007 revenues.
 
Affy’s stock price has declined nearly 40 percent since the end of the third quarter. The company said today that this drop has caused its market value to fall below its net equity value, which will require it to assess whether an impairment of its intangible assets has occurred. The company expects to complete this impairment analysis during the fourth quarter.
 
Yesterday, Affymetrix said that founder, chairman, and CEO Stephen Fodor will relinquish his CEO responsibilities as of Jan. 1, 2009.
 
Fodor will serve as full-time executive chairman, while Kevin King, currently president of Affymetrix, will become CEO and a member of the board of directors.

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