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As Expected, Affymetrix's Q2 Revenues Drop 12 Percent

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Affymetrix reported after the close of the market Wednesday that its second-quarter revenues fell 12 percent as its services revenues declined sharply year over year.

The drop was expected, as Affy announced two weeks ago that it expected to report Q2 revenues of between $71 million and $72 million — far below its previous guidance of $80 million to $82 million. At that time, the firm cited a few factors that it believes contributed to the shortfall, including a delayed and lengthening of capital equipment purchase cycles by academic research customers, particularly in Europe, as well as declines in RNA-related sales, which it said were caused by the integration of recent acquisitions and realignment of sales territories.

On Wednesday, Affy reported that its second-quarter product sales fell to $65.1 million for the three-month period ended June 30, compared with $67.2 million for Q2 2009. Its services revenues dropped to $4.7 million from $12.2 million, while its royalties and other revenues declined to $1.8 million from $2.2 million.

"Within the US, industry feedback and surveys indicate that about 50 percent of labs do not expect stimulus funding for the year, while only 29 percent of labs have or are expecting stimulus funding during the year," Affymetrix President and CEO Kevin King said in a conference call following the release of the Q2 results. "The second quarter instrument opportunities that we didn't convert remain in our pipeline as we continue to develop even more opportunities for the future."

King also noted that during the first quarter Affy had begun integrating its Panomics sales channel into its global GeneChip sales channel. "In the process, we made significant changes to our US and European territory management structures, account responsibilities, and we provided several weeks of product training, that in total have temporarily disrupted the dynamics of the business," he said. "We're moving aggressively to get this back on track as quickly as possible."

The firm also swung to a loss from a profit the year before. Affy's net loss for Q2 2010 was $5.5 million, or $.08 per share, compared to a profit of $7.3 million, or $.11 per share, for the second quarter of 2009.

Its R&D spending decreased around 13 percent to $17.8 million from $20.4 million, while its SG&A expenditures fell 10 percent to $28.4 million from $31.7 million.

Affy finished the quarter with $77.2 million in cash and cash equivalents.

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