California-based genetic product maker Affymetrix Inc. (AFFX: 4.12 +0.08 +1.98%) slashed its revenue outlook for second-quarter 2010. The company is slated to release its second quarter results on Jul 21, 2010.Based on the preliminary financial metrics, Affymetrix has pruned its second quarter revenue target to $71 million - $72 million from its earlier projection of $80 million - $82 million. The company envisions product sales for the quarter to be roughly $65 million - 66 million. Affymetrix has declined to divulge any updated revenue outlook for the remainder of 2010 given the foreign exchange headwinds and uncertainties related to research funding.
The company attributed the anticipated revenue shortfall to delayed capital equipment purchases by its academic research customers, notably in Europe. It also stated that higher sales of its DNA products to be offset by lower RNA revenues and significant deterioration in the Euro and British Pound to weigh on its top line (an estimated impact of $1 million). However, despite this slowdown, Affymetrix expects to be cash flow positive in every quarter of fiscal 2010.
A difficult operating backdrop in Europe is affecting Affymetrix. The company’s European business has been hurt by lower spending by academic research organizations, impacted by government actions (such as budget cuts) to address surging debt levels and weak currencies.Affymetrix posted revenue of $80.2 million in first-quarter 2010, a 2% year-over-year increase. Adjusted (excluding impairment charges) net loss per share was 7 cents, lower than the Zacks Consensus Estimate of a loss of 9 cents. The current Zacks Consensus Estimates of loss per share and revenue for the second quarter are 4 cents and $82 million, respectively.
Affymetrix is a leading provider of microrray-based products and services to the global research community. It is one of the two major providers (along with Illumina Inc. [ILMN]) of microarray technologies, primarily used in the field of genetic research.
Affymetrix is broadening its customer base through new product introductions and strategic alliances. The company continues to enjoy steady revenue streams from its arrays, accounting for a meaningful portion of its product revenues. However, the company is increasingly being challenged by competitive product offerings that leverage advanced technologies.
Following the sharp reduction in sales estimate, shares of Affymetrix tumbled $1.51 (or 27%) closing at $4.04 on Jul 7, 2010. The company’s shares also touched a new 52-week low of $3.95 yesterday.
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