Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Insatiable Illumina

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.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 571789, ~/Articles/ArticleHandler.aspx, 10/26/2016 11:52:20 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 hours ago Sponsored by:
DOW 18,199.33 30.06 0.17%
S&P 500 2,139.43 -3.73 -0.17%
NASD 5,250.27 -33.13 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/26/2016 4:00 PM
ILMN $139.95 Up +1.77 +1.28%
Illumina CAPS Rating: *****
AFFX.DL $14.01 Down +0.00 +0.00%
Affymetrix CAPS Rating: **
DCGN $0.07 Down +0.00 +0.00%
deCODE Genetics CAPS Rating: ***