When I wrote about Affymetrix
This quarter didn't offer up much in the way of good news, either. Overall revenue dropped 5%, product revenue fell 6%, and the company once again missed guidance on the bottom line. As you might imagine with this sort of company (a razor/razor blade business model with significant operating leverage), margins were weak beneath the lower sales performance.
Speaking of competition, management cited that as a primary issue this quarter. When you look around the sector and see how well rival Illumina
Affymetrix is still a leader in gene expression technology, but this market is getting more like regular ol' diagnostics. That's not terrible -- companies like Beckman Coulter
Despite all of that, I'm more interested in this stock now than I have been in quite a while. I get very skeptical of technology leaders when investors begin assuming "it's different this time" and push the stocks up to unrealistic levels. But I get very interested when those same investors get disillusioned and bail out. It's not uncommon for the misevaluation to swing completely the other way and a company with legitimate technology and competitive products to be treated as though it's out of the running. While I would expect the going to be tough for Affymetrix for a little while yet, opportunistic investors should keep an eye on this one.
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Affymetrix is a recommendation of Motley Fool Rule Breakers , the newsletter service that tracks companies shaking things up. If you'd like to see what other innovators David Gardner has recommended, try out Rule Breakers free for 30 days.
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).