My desk is swimming in a sea of scribbled notes, Post-Its, and press releases -- the aftermath of two weeks of earnings announcements. Today capped it off with announcements from Celera Genomics (NYSE: CRA) and Starbucks, two very different businesses at different stages of life.
Celera should be (and is) experiencing growing losses. Management raised money to spend it on building a business. Celera's research and development costs and sales and marketing costs (to increase sales) are rising quickly.
Celera's Q4 sales topped $15 million
Revenues are rising rapidly, too. Fourth quarter sales topped $15 million, up from $5 million in the same quarter last year, while sales for the year ended on June 30 were $42.7 million, up from $12.5 million the year before. You can read all of the fourth quarter results in Celera's press release. What I always find most interesting are the conference calls afterwards. There you can usually snag tidbits of additional information. You can hear Celera's call replay through its homepage.
Aside from disclosure of a sales and marketing buildout, the conference call provided word that Celera's revenue could double in its new fiscal year, topping $84 million. The company expects to continue to add new subscribers rapidly. Celera's president and chief scientific officer, Dr. Craig Venter, stated that the company's mouse genome has been a key asset in driving subscription growth. The human genome by itself is "absolutely useless," he said, unless you have other genomes, namely the mouse, to compare it to. Celera also stated that the average subscription to data that includes the mouse genome costs at least $5 million annually.
Dr. Venter next said that the company is building a discovery engine on a scale that has never been done before, as it did with its sequencing engine. The focus is on proteomics. (For a scientific explanation of proteomics, see Signals magazine -- and thank you to Fool Lee Mitnick for sending that article to me. For ways to invest in proteomics leaders, consider buying the Soapbox.com report on proteomics.) With proteomics as the foundation, Celera will find targets for disease that can lead to therapeutics. The company is focused on antibodies on a large scale. Depending on how its discovery process unrolls, Celera may either partner or go it alone in developing cures for disease following discoveries.
That decision -- whether or not to produce its own drugs -- will be based mainly on discovery. It will depend upon what Celera discovers and when. Don't expect any decisive decisions on the issue for a few years. Plus, management did say that the company will stay focused on its expertise -- discovery -- and it would take a good deal to make Celera move into drug trials, production and marketing, something that the pharmaceutical leaders already do very well.
So, in summary for Celera:
- Revenues could double in the next twelve months to top $84 million.
- Subscriber numbers are expected to grow rapidly.
- R&D and sales and marketing costs will rise rapidly.
- The cash balance, at more than $1 billion, is enough to fund the foreseeable future.
- Proteomics and antibodies are a focus of Celera's new discovery engine.
- The end goal is to cure disease.
Starbucks grew earnings 42%
Switching gears, Starbucks (Nasdaq: SBUX) reported results that met expectations (and new expansion plans that exceed expectations) as third quarter earnings rose 42% from last year. The company was voted as having one of the most valuable brands in the world. We won't argue. The Starbucks brand has such integrity that it has led to sales of ice cream and bottled drinks -- with partner PepsiCo (NYSE: PEP), the Drip Port's latest purchase -- food, and other Starbucks branded items. Internationally, the company is a hit, especially in the U.K. and the Asia-Pacific.
Starbucks' conference call was later this afternoon, so we have nothing to share yet that isn't in the press release linked above. Motley Fool Research, which covers Starbucks, will analyze the results and have thoughts on the stock's prospects soon.
eBay's Half.com could expand to other categories
Finally, eBay's (Nasdaq: EBAY) conference call went well on Tuesday. The company's inventory-free, network model holds great promise for a long-term, high margin business. The most interesting snippet in the call was the possible direction of Half.com, which currently sells just movies, books, music and games. The site can sell anything that has a UPC code. So, Half.com could next begin to sell electronics for at least half price, CEO Meg Whitman said. Beyond that, possibilities are numerous. (Today Motley Fool Research wrote about the advantages of online businesses such as eBay.)
Electronics happens to be Amazon's (Nasdaq: AMZN) fastest-growing business segment in the United States. Other than that, Amazon's conference call didn't yield any surprises. Hey, how about all those analyst downgrades (baaa! -- sheep) today! More than 1,000 mutual funds owned Amazon in the first quarter of this year. Now, estimably less than 200 own it. That's a lot of selling behind us. What's next? Amazon has its work cut out for it. It and Celera will be interesting to watch evolve!
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