You've heard of companies beating analysts' expectations, but beating management's own "preliminary" revenue announcement? Now there's a neat trick!
Such was the case with Illumina
Investors weren't buying it; shares dropped 3% on Friday. Some of the drop may have had to do with the stellar performance competitor Affymetrix
Investors may also be worried about the DNA-sequencer wars, which are hitting new highs. Not long after Illumina announced the release of its HiSeq 2000 sequencer, which can sequence a human genome for less than $10,000, Life Technologies
Illumina may be behind in the lowest-cost-per-genome contest, but management didn't sound too worried about the competition on the earnings call. Part of the confidence may stem from Illumina's development of an instrument with a lower up-front cost, which can pursue other aspects of the sequencing market. Not every lab is focused on wanting the fastest machine for the lowest cost. Labs that aren't sequencing thousands of genomes a year will be more focused on keeping initial capital costs down, and Illumina's Genome Analyzer IIe should fit the bill, at less than half the cost of the HiSeq 2000.
I continue to think that Illumina and other laboratory supply companies like Waters
At least, as long as management's surprises aren't much more than $5 million.
Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool owns shares of and has created a covered strangle position on Waters. The Fool has a disclosure policy.