What: Pacific Biosciences of California (PACB 12.00%) was up as much as 15.7% today after the DNA sequencer maker reported third quarter earnings after the bell yesterday.

So what: Revenue at Pacific Biosciences decreased year over year in the third quarter, but that was entirely due to the timing of payments (and amortization thereof) from its partner Roche. Revenue from products and services increased 15.7% year over year.

Rival Illumina (ILMN -1.62%) reported a 14% increase in revenue earlier this week, so Pacific Biosciences is doing a little better. Of course Illumina has sales of $550 million in the third quarter. Pacific Biosciences' revenue from products and services was just $10.3 million -- it's still very much a David versus Goliath.

The rally today probably has somewhat to do with the worry that Pacific Biosciences might not have the best quarter after Illumina's growth projection for the year was substantially reduced. Illumina blamed slow sales of desktop instruments -- note that Pacific Biosciences doesn't have any -- and sales outside the U.S., specifically Europe and the Asia-Pacific region. Pacific Biosciences doesn't break out regional sales, but chairman and CEO Mike Hunkapiller did mention that many of the machines in Europe were getting used more often than usual.

Sequel System. Source: Pacbio

Now what: While it's great to beat your rival in the revenue-growth department, sales in the previous quarter aren't particularly telling of the company's potential, as it just launched its new Sequel System, which is supposed to lower the cost of sequencing. Sales of its older machine were limited to niche applications where Illumina's technology couldn't do the job. By lowering the cost of sequencing, Pacific Biosciences may be able to grab some of Illumina's market share.

The Sequel System will also be used as the basis for the partnership with Roche, which is developing diagnostics to be used on the machines. Unfortunately most of the details of the deal haven't been released, so it's hard to know how much the new application will be able to drive Pacific Biosciences' sales.