NEW YORK (GenomeWeb News) – Affymetrix reported after the close of the market on Wednesday that its fourth-quarter revenues retreated 4 percent as product sales fell 12 percent from a year ago.
For the three months ended Dec. 31, 2010, the Santa Clara, Calif.-based microarray firm said revenues totaled $84.9 million, compared to $88.8 million for the fourth quarter of 2009. The results fell just short of Wall Street estimates of $85 million.
Product revenues for the quarter were $71.9 million, down from almost $81 million a year ago. Figures for the fourth quarter of 2010 include $63.4 million in consumables revenues and $8.5 million in instrument revenues.
In the year-ago period, Affy posted $71.9 million in consumables revenues, and $9.1 million in instrument revenues.
Service revenues for the quarter totaled $6.4 million and royalties and other revenues were $6.6 million, compared to $5.9 million in service revenues and $1.9 million in royalties and other revenues a year ago.
Affy's R&D costs for the fourth quarter were down 9 percent to $15.5 million from $17 million a year ago, while SG&A spending was down 17 percent to $28.7 million from $34.6 million for Q4 2009.
Affy said net income for the quarter rose 42 percent to almost $4 million, or $.06 per share, from $2.8 million, $.04 per share, a year ago, surpassing analysts' EPS estimates of $.02.
In a conference call following the release of its earnings, Affymetrix President and CEO Kevin King said that the overall decline in its business was driven by a "major slowdown in scientific services and lower-than-expected sales within the discovery segment of our business.
"Clearly the number one priority for the future is driving top-line revenue growth," he added.
King noted strong demand for Affy's discovery products from academic and pharma customers as the business sustained a double-digit volume increase throughout 2010. Nonetheless, that business was down 5 percent for the year, compared to 2009 "as the adoption of lower priced products increased as a percent of total mix."
The change in mix occurred in both Affy's DNA and RNA business.
During the call, CFO Tim Barabe said that DNA revenue slid 14 percent to $21.5 million in the quarter from $25 million in fourth quarter of 2009. RNA revenues dropped 19 percent to $36.4 million from $44.6 million a year ago.
For the full year DNA revenues increased 3 percent to $91.3 million, while RNA revenues slid 8 percent to $147 million.
The company emphasized product diversification as a source of growth and during the call company officials reiterated that theme. The firm is looking to expanding in clinical markets, and King said that cancer and cytogenetic products continue to grow and are expected to add to Affy's DNA revenue in 2011 and beyond.
Interest among top cancer centers and pharma is also growing for its OncoScan service, King added, and the company is working to develop it as a "consumable product in the future."
For full-year 2010, Affy's revenues slid 5 percent to $310.7 million from $327.1 million in 2009, and missed analysts' estimates of $311.9 million.
Its product revenues decreased to $277.7 million in 2010, compared to $279.2 million in 2009. Service revenues plunged 48 percent to $20.6 million from $39.6 million a year ago, though royalties and other revenues increased 49 percent year over year to $12.4 million from $8.3 million.
The company reduced its net loss for the year by 57 percent to $10.3 million, or $0.15 per share, from $23.9 million, $0.35 per share, in 2009, but fell short of Wall Street estimates of a loss of $0.13 per share.
For full-year 2010, Affy spent $67.9 million on R&D, down 12 percent from $77.4 million in 2009. SG&A costs shrank to $114.8 million for 2010, down 12 percent from $130.8 million in 2009.
Affy's results for 2010 include a $6.3 million gain from the repurchase of convertible notes, and its 2009 figures include a gain of $17.4 million in the repurchase of convertible notes, as well as restructuring charges of $2.2 million.
As of Dec. 31 Affy had $35.5 million in cash and cash equivalents and $67.2 million in available-for-sale securities.
In early Thursday trade on the Nasdaq, Affy's shares climbed around 9 percent to $5.39, as investors responded to the better-than-expected profit for Q4.