Affymetrix's (Nasdaq: AFFX) year-over-year comparisons continued to benefit from its weak 2006 when it released fourth-quarter results last week. Then again, who can complain about a 47% increase in net income as the company grows back into its inflated P/E?

Revenues for the year were up just 4.5% from 2006, but cost-cutting measures, such as moving manufacturing to its Singapore plant, helped boost the bottom line considerably. Earnings per share for the year came in at $0.17, compared to a $0.20 loss in 2006. The Rule Breakers pick has certainly had a nice turnaround.

For this year, the gene chip maker expects revenues to jump 12%-17%, excluding the income from its settlement with Illumina (Nasdaq: ILMN). Part of the increased revenues will be because of the company's recent acquisition of USB, although management was unwilling to break out the numbers yet, since the purchase just closed last week. On the conference call, management was also willing to highlight other areas it expects to expand.

Last week, Affymetrix announced that Laboratory Corporation of America (NYSE: LH) will use its gene chips to perform genetic tests to look for duplications and deletions of segments of DNA that cause diseases such as Down syndrome. Adding automation to this fairly labor intensive test should help bring down the costs, which in turn may increase the number of tests performed by doctors. You've got to love it when a company can not only take market share, but actually increase the size of the market.

Affymetrix also announced a partnership with Clinical Data (Nasdaq: CLDA) earlier this month to market its Drug Metabolizing Enzymes and Transporters (DMET) service. The test allows drug companies to quickly determine how pre-clinical drugs might act before the compounds get into human trials. By weeding out the potential losers, drug companies can save time and money.

I think it's safe to expect further expansion in the form of acquisitions from Affymetrix; after all, it has only used a fraction of the proceeds from its recent convertible notes offering. Continued expansion into diagnostics and clinical services should help the company diversify and avoid another year like 2006.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. LabCorp is a pick of the Stock Advisor newsletter. The Fool has a disclosure policy.