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Amid Sliding Revenue and Rising Costs, Bruker Cuts 5 Percent of Workforce; Reorg to Hit R&D


Following two successive quarters of declining revenues and swelling costs, Bruker Biosciences has eliminated approximately 60 positions, or 5 percent of its staff, via attrition, early retirement and lay-offs, the company announced last week.

“There was a creeping up of expenses,” said Michael Willett, a spokesman for Bruker. “We want to continue to fund R&D and this was a step to enhance profitability and to be profitable in general.”

Bruker’s product revenues totaled $64 million in the second quarter of 2004, down from $67.9 million in the first quarter of 2004 and $73.6 million in the fourth quarter of 2003 (see graph, page 5).

Within the Bruker Daltonics side of the company, which focuses on tools for proteomics and life science research, the cuts will affect mostly research and development and production in the US, Willett said. Within the Bruker AXS side of the company, which focuses on X-ray crystallography tools, the cuts will affect European and US sales.

“Our management teams have conducted a thoughtful bottom-up analysis of our operations, and we have taken significant organizational steps in order to realize gains in productivity,” Bruker CEO Frank Laukien told investors at the Bear Stearns healthcare conference held earlier this week in New York. “We are optimistic that with a streamlined organization we will be able to do more with less, and intend to continue to drive 13- to 15-percent top-line growth in the future.”

Laukien emphasized that despite the layoffs, the company is still profitable and Bruker products are still in healthy demand. He pointed out that backlogs on orders increased by 20 percent from June 2003 to June of this year, and new order bookings were up 15 percent from the first quarter of 2003 to the first quarter of 2004.

“It’s a sign that the demand is healthy, the markets are healthy, and our products are competitive,” Laukien said.

Though Bruker owes much of its success to innovative R&D, it will not be increasing R&D spending over the next three years, Laukien said. As a result, R&D as a percentage of total revenues will decrease from 14.5 percent to about 11.5 percent over the next three years, Laukien projected.

“Sometimes with R&D, less is more,” Willett said. “We have focus teams of R&D that come up with cutting-edge innovative products without huge funds. The success is really a question of management and vision and working closely with customers.”

According to the company’s 2003 annual report, mass spectrometry sales increased to 41 percent from 38 percent of total revenues, while X-ray crystallography tools decreased to 29 percent from 35 percent. Sales of aftermarket products, which include service parts, training, and software upgrades, increased to 25 percent in 2003 from 20 percent in 2002, and nuclear, biological, and chemical detection agents decreased to 5 percent from 8 percent year-over-year.

Despite their decline from 2002 to 2003, NBC sales were expected to increase this year and in the future, Laukien said.

“There are now significant budgets for nuclear and chemical detection agents,” said Laukien. He said 10 percent of revenues from the Bruker Daltonics side of the company come from NBC.

New NBC products include the HAWK standoff detector that can detect chemicals within a three-mile radius, and the $15,000 RAID-XP hand-held chemical detection unit that can be used by firefighters as well as by military and defense units.

More new products will be launched at the international Human Proteome Organisation conference scheduled to take place in Beijing during the last week of October, Laukien said.




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