With its patent litigation behind it, Illumina (Nasdaq: ILMN) is free to do what it does best: Sell a lot of those little biochips.

Fourth-quarter revenue was up a staggering 86%. Perhaps most impressive was the 216% year-over-year increase in instrument sales. While the instruments tend to have lower gross margins, they drive sales in future quarters as customers buy consumables to run their shiny, new machines.

The revenue gains are impressive, but Illumina needs to stay fiscally responsible if it wants to grow its bottom line as well. Both research and development and selling, general, and administrative expenses rose as a percentage of sales compared to the year-ago quarter. To justify the increased costs, Illumina will need to show increased sales during the coming quarters.

Excluding charges -- which include more than half of the $90 million settlement with Affymetrix (Nasdaq: AFFX) -- net income was up 6%. But adjusted earnings per share dropped year over year, because there were more shares outstanding. That's the problem with a stock that doubles in a year: Employees tend to exercise their options.

Management still didn't give much information about the direction of its new diagnostics division. From the conference call, it sounds like the company is still trying to find a direction. We should get more information toward the end of the year on whether it will stick with something like deCODE genetics' (Nasdaq: DCGN) genome-wide tests or focus on clinical diagnostics.

For 2008, Illumina is expecting year-over-year revenue growth to slow down to just 36%-43%. With its CEO claiming that sequencing demand will be "insatiable for ten years," it sounds like we shouldn't expect too big a slowdown anytime soon.