Tuesday, April 15, 2008

Affymetrix (AFFX) Blows Up on Warning

Affymetrix (AFFX), which is a competitor to fund holding Illumina (ILMN) warned last night and is being taken to the woodshed today, down over 1/3rd. What is more troubling than the actual warning is the reasoning - a slowdown in research by customers. That's not really something you expect in healthcare - I wonder if this is in anyway related to the drop off I mentioned yesterday in Parexel International (PRXL) [Keeping an Eye on... Parexel International]- they are not directly related but both provide (for lack of better word) - 3rd party research to the pharma business. That is supposed to be a safe haven immune to slowdown. So news like this makes me concerned; not just for Illumina but the sector (and economy). Again, this stuff is supposed to be "recession proof". Hmm.... will have to monitor this to see if its company specific or part of a larger trend.
  • Affymetrix Inc (AFFX), a maker of microchips used in genetic research, cut its 2008 revenue outlook by about 3 percent, citing expected lower research spending by pharmaceutical and industrial customers.
  • For 2008, the company expects revenue of $490 million to $510 million, compared with its prior view of $505 million to $525 million.
  • Cowen analyst Doug Schenkel said sales of the company's GeneSpring GX software missed expectations, and may have fallen as much as 20 percent from last year. He said he does not see any signs that demand from biopharmaceutical companies will increase, and wondered why Affymetrix did not cut its forecast further.
Long Illumina in fund; no personal position

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