Waters Corporation: A Mass Spectrometry Company?

In its fourth quarter earnings report for 2000, described in its January 20, 2001 conference call, it was not HPLC Waters was talking about. Waters and HPLC have long been almost synonymous as Waters is the leading HPLC company in the world and has been since the market took shape over 30 years ago. But the news from the company's fourth quarter earnings release emphasized its mass spectrometry sales.

In 1997, Waters purchased Micromass, a UK-based mass spectrometry company for $178 million (see IBO 9/15/97). Although the acquisition was primarily intended to benefit Waters' LC-MS business, which it did, the acquisition has been a gold mine for Waters as mass spectrometers, particularly high-end units, such as those that Micromass produces, have come into demand for proteomic research.

Waters' fourth quarter results emphasized the role that mass spec sales have come to play in the company. In Waters' conference call, the company reported that its mass spec sales grew by 40%. Q-ToF MS led mass spec sales, but the magnetic sector product line also showed growth due to increased chemical analysis sales. Together, sales of LC-ToF and Q-ToF grew nearly 50% in the quarter. The company estimates MS sales will grow over 25% in 2001. Waters now reports that mass spec accounts for 30% of its sales, up from 25% last year. The company also announced several of the mass spec products it will be introducing at Pittcon in March.

Is Waters now a mass spec company? No, but Micromass is, and although the companies have kept separate identities, and each has retained its own sales and service organizations, Micromass' success is clearly a feather in Waters' cap. And Micromass has clearly benefited from having Waters behind it, providing marketing and distribution muscle and R&D dollars.

But despite its success with MS products, Waters has given no indication that its focus will not continue to be HPLC. After all, HPLC sales also grew in double-digits for the quarter and promise the same growth next year. Nonetheless, the growing share of mass spec sales is transforming Waters into a different kind of company. A company with a broader focus and a new outlook.