Affymetrix and Sequenom cut 2008 sales forecasts.

San Diego, CA 4/3/08; Santa Clara, CA 4/14/08 -- Leading microarray provider Affymetrix has reduced its 2008 revenue guidance by approximately 3% to $409-$510 million from $505-$525 million, which would result in sales growth of 10%-37%. The company attributed the reduction to its expectations for lower research spending by pharmaceutical and industrial customers and stated it is reviewing cuts to operating expenses to offset the expected decrease. Excluding a $90 million payment related to a litigation settlement (see IBO 1/15/08), Affymetrix forecasts first-quarter revenues of $80 million, which would result in flat sales growth. Citing less than expected first-quarter sales in the US, Sequenom, a provider of MS-based systems for research and diagnostics, has reduced its 2008 revenue forecast by approximately 5% to $50-$53 million, which would result in a 22%-29% revenue increase from 2007 (see IBO 2/29/08). In February, the company forecasted 2008 sales of $53-$56 million. The company attributed the revised forecast to delays of capital equipment purchases by US research and academic institutions due to economic uncertainty. "While we are pleased with our sales performance in Europe and the rest of world for the first quarter, we continue to monitor US systems sales closely, especially our research institution customers that rely significantly on external funding for their projects," stated Sequenom President and CEO Harry Stylli. The company maintained its guidance for 2008 of a net loss of $30-$33 million and cash burn of $26-$28 million.

On April 15, Affymetrix's stock plunged 33% to a 10-year low. Securities analysts attributed the cut to disappointing sales of the GeneSpring GX software, slowing growth in the gene expression market and greater competition. Taken together with Sequenom's announcement, the revisions may be an indication of the adverse effects of the weakening US economy and cuts by major pharmaceutical companies on life science instrument sales. It also suggests the vulnerability of less diversified instrument companies to such a slow down.