Siebel, Affymetrix lower estimates
Warning from Santa Clara maker of gene chips depresses stock
Bernadette Tansey, Chronicle Staff Writer
Saturday, April 5, 2003
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Shares in Affymetrix Inc. plunged nearly 35 percent Friday after the Santa Clara biotechnology company said revenue for the first quarter will fall short of its previous estimates.
Affymetrix, the largest manufacturer of DNA chips widely used in genetic research, said budgetary concerns among its buyers in university and private biotech labs are causing them to hold back on purchases of chip readers and other equipment.
"After posting record revenue for fiscal year 2002, our rate of growth has been affected by global economic weakness and cautious capital spending," Affymetrix Chief Financial Officer Greg Schiffman said.
First-quarter revenue is now projected at $60 million to $62 million, compared with the company's prior guidance of $71 million to $73 million, Affymetrix said. The company did not give estimated first-quarter earnings, which analysts had projected would be 3 cents. An earnings announcement is scheduled for April 23.
Shareholders' reaction to Affymetrix's $11 million forecasting deficit was a high-volume sell-off that erased more than half a billion dollars of the firm's market value. Shares dropped $9.67, or 34.54 percent, to close at $18. 90.
One industry analyst said the market overreacted. John McCamant, editor of the Medical Technology Stock Letter in Berkeley, said the firm's sales slump doesn't erode basic strengths that make Affymetrix one of the least risky biotech investments.
"This is the standard of the industry," said McCamant, who doesn't own Affymetrix shares.
In a well-worn analogy, Affymetrix is compared to the Gold Rush entrepreneurs who, rather than panning for gold themselves, made money by selling supplies, or "mining the miners." Instead of mining the human genome for cancer cures and other blockbuster drugs, Affymetrix sells tools that help researchers of all kinds. Its gene chips allow researchers to rapidly scan biological samples for DNA characteristics of disease germs or genetic defects.
McCamant said Affymetrix is branching out from that role through a collaboration with Roche Holding AG, the Swiss pharmaceutical giant, to diagnose genetic variations among patients so their doctors can choose the best treatment for each individual.
E-mail Bernadette Tansey at btansey@sfchronicle.com.
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