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Mass Spec Business 'Excellent' as Thermo Fisher Q3 Revenues Shrink 2 Percent

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This story originally ran on Oct. 22.

Despite reporting a 2 percent decline in total revenues for the third quarter, Thermo Fisher Scientific officials said this week that mass spectrometry sales were "excellent" with acceptance of its newly launched Velos platforms "very strong."

In addition, Marc Casper, president and CEO of the firm, estimated that half of all stimulus grant proposals employing mass specs centered around Thermo Fisher's mass spec technology.

For the three months ended Sept. 26, the company said revenues slid to $2.53 billion from $2.59 million during the year-ago period. Acquisitions increased revenues by 2 percent compared to a year ago, while foreign currency lowered it by 2 percent.

Organically, revenues also saw a 2 percent decline.

Profits for the quarter inched up a little more than 1 percent to $221.2 million. Earnings per share climbed to $0.54, up from $0.52 during the third quarter of 2008.

The company's Analytical Technologies division, which houses Thermo Fisher's mass spec operations, saw a 6 percent drop in revenues year over year to $1 billion from $1.1 billion. But without giving specific figures, Casper said "We had an excellent quarter in sales in our mass spectrometry systems for life science research," and added that the firm believes that about half of all "mass spectrometry grants tied to stimulus programs" employ Thermo Fisher's technology.

Responding to an analyst's question during a conference call accompanying the release of the quarterly results, Casper said the company is basing that estimate on surveys conducted by itself as well as by others. In addition, he noted that Thermo Fisher helped many researchers write their grant proposals, "so we have a pretty good sense of what's going on in the mass spectrometry landscape."

While the recovery from the general economic downturn continues, Thermo Fisher still faces several challenges, he added. Nevertheless, the mass spec business "continues to do well despite the fact that … those instruments often [sell] at a half-million dollars," he said.

Shipments of the LTQ Velos and LTQ Orbitrap Velos platforms, introduced at the annual conference of the American Society for Mass Spectrometry in June [See PM 06/04/09] have been "very strong and we expect orders to accelerate." Meanwhile, its flagship Orbitrap platform "continues to dominate this market," Casper added.

Strength in its mass spec business also could bode well for sales of the firm's reagents and consumables "since they will be needed to support new mass spec installations over the long term."

Today's earnings release was Thermo Fisher's first under Casper's stewardship, after Marijn Dekkers departed earlier this month to assume the CEO position at Bayer. Casper said that he and Pete Wilver, Thermo Fisher's chief financial officer, had worked closely with Dekkers for the past eight years developing and executing the company's strategy.

As a result, he feels "very comfortable" with the direction of the firm. Thermo Fisher will continue to try to leverage its technologies and to focus on innovation. It also will continue to build up its business in Asia.

However, Casper said he is not seeking a replacement for his former post of chief operating officer. Instead, those responsibilities will be divided among other management.

During the quarter, organic revenue rose in the low-single digits in Asia-Pacific, while the US and Europe declined at about the company average, and the rest of the world slid in the high-single digits, Wilver said.

R&D costs were down 2 percent to $60.5 million, while SG&A costs were down less than 1 percent to $544.5 million. The company reported almost $1.8 billion in cash and cash equivalents as of Sept. 26.

For full-year 2009, the company gave revenue guidance of $9.95 billion to $10.05 billion, down 4 percent to 5 percent from 2008 revenue of $10.5 billion, and an adjusted EPS guidance of $2.95 to $3.05, a 3 percent to 6 percent decline from $3.13 in 2008.

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