Molecular Devices Finds Biotech Slowdown Is Contagious
By Adam Feuerstein
Staff Reporter
4/9/01 7:30 PM ET
Who said biotechnology companies were immune to the crappy economy?
Try telling that to biotech equipment maker Molecular Devices (MDCC:Nasdaq - news), which failed miserably to meet first-quarter consensus estimates today because -- yup, you guessed it -- customers weren't buying.
Molecular Devices earned 10 cents per share on revenue of $20.7 million in the first quarter, the company said today. Unfortunately, analysts were expecting earnings of 20 cents per share on $26.5 million in revenue, according to Thomson Financial/First Call.
Shares of Molecular Devices closed up $1.05 to $49.99 in Monday trading before results were announced. But shares plummeted to as low as $33.50 on Instinet after investors got wind of the earnings debacle.
In explaining the shortfall, Molecular Devices CEO Joseph Keegan sounded like just about every other technology firm that has found customer checkbooks clamped tight.
"We typically experience a large number of orders closing near the end of the quarter," he said in a statement. "Our order data late in the quarter suggests that a number of our pharmaceutical and biotechnology customers may have delayed or postponed purchasing decisions as a result of the current economic uncertainty."
Molecular Devices becomes the second biotech equipment maker to use the slumping economy as an excuse for slowing sales, which should put a dent in the argument that well-funded biotech firms aren't worried about paying for big capital-equipment purchases.
On March 30, Applied Biosystems (ABI:Nasdaq - news) warned of lower-than-expected sales growth over the next several quarters because of slowing customer demand. At the time, analysts said weakening sales would not infect other players in the biotech equipment sector, insisting that the problem was isolated to Applied Biosystems.
It's obviously not an isolated instance, given today's warning by Molecular Devices. And the problems won't be limited to the first quarter. The company also made deep cuts to guidance for earnings and revenue for the second quarter and the entire year.
Molecular now says it will earn between 16 cents and 18 cents per share on revenue of $26 million to $28 million in the second quarter. Consensus estimates call for the company to earn 27 cents on $30 million in revenue.
For the year, the company now says it will earn 70 cents to 80 cents per share on sales of $105 million to $110 million. Consensus estimates call for Molecular to earn $1.22 on $127.5 million in revenue.
Company executives are holding a conference call Tuesday morning to discuss first-quarter results and the company's outlook for the year.
Investors will be listening to see whether the bad news knocking Molecular Devices for a loop is likely to spread to other biotech equipment makers.
Bruker Daltronic (BDAL:Nasdaq - news)issued a statement Monday night stating orders for its mass spectrometry equipment are right on target, allowing the company to stick to previous guidance. Still to be heard from are companies like Waters (WAT:Nasdaq - news) and Invitrogen. (IVGN:Nasdaq - news) |
