I'm not sure what investors were expecting here. With biochip maker Illumina
Still, investors seem worried about what the company will do with that cash. They've sent the stock down more than 5% since the company announced that it would sell an additional 3.5 million shares. That will increase its outstanding shares by 7.1% if the 525,000 share overallotment is also sold, so this is definitely no small offering.
The $300 million question: What will Illumina do with the money? The offering's prospectus says that the company plans to use the cash to increase research and development, manufacturing capacity, or maybe make an acquisition or two. While Illumina claims that it doesn't have any company in mind, I'd bet that Illumina will spend the bulk of its newfound cash on an acquisition.
Illumina has been killing Affymetrix
The other option for Illumina is to follow through on its plan to push into diagnostic tests. That could mean buying up a small CLIA-certified laboratory similar to Affymetrix's, or picking up a company like deCODE genetics
Ironically, if the company does absolutely nothing with the money, the offering could boost its earnings per share just a bit, according to one analyst.
Whatever Illumina decides to do with the cash, I don't think investors should be too worried. As the recent growth in earnings suggest, management knows what it's doing.