Biotech giant Genentech (NYSE:DNA) is a paradox in many ways. It's a big company, but still apparently a pleasant place to work -- a place where employees are treated with respect. It has a great suite of approved drugs, but there might be some gaps in the pipeline. And while it's sometimes a Wall Street darling, it seems like the Streeters have their eyes on the wrong balls right now.

For this quarter, revenue was up 36% as product sales rose 39% to over $1.6 billion. Profits also improved, and the company saw reported operating income climb 49% and reported GAAP income rise 48%. On a non-GAAP basis, adjusting for stock compensation expense, profit growth was actually on the order of 57%.

Now, here's where the weirdness starts -- the company's stock is down even though both revenue and earnings were better than analysts expected. What's more, apparently some people were bothered that Rituxan sales missed their estimate. Never mind that sales of Avastin were ahead of the average estimate and Avastin is both faster-growing than Rituxan and also probably more important to the company's future growth .

But I too am a little concerned about the pipeline. At present, nearly all of the late-stage trials are for follow-on indications of existing drugs. There's nothing wrong with that, but we all know what happens when companies have gaps in their development pipelines -- sooner or later, generics come into the picture and earnings growth is momentarily stalled out. Now, I don't pretend to know the innermost workings of this company, so maybe it's simply conservative with early-stage development and only advances the most promising new candidates into later studies. Either way, it bears notice.

Last but not least, I'm a little amused by the focus of so many analysts on earnings and P/E ratios. You can't eat earnings -- cash flow is what really matters. And I read an interesting report recently from Morgan Stanley's analyst that pointed out that Genentech may well have to spend a considerable amount of its cash flow on stock buybacks to counteract dilution from options and maintain Roche's contractually obligated ownership stake.

So in a very weird sense, long-term holders might actually want to hope for a nasty but brief drop in the stock. That could allow the company to buy more shares at a cheaper price and perhaps reduce that future cash flow liability.

See, I told you this was weird.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).