Affymetrix (NASDAQ:AFFX) may be a turnaround story waiting to happen, but it looks like that turnaround is still a ways off.

Third-quarter sales were down 21% year over year. The year-over-year comparisons have been getting worse as the year has progressed. That's especially depressing because Affymetrix's closest competitor, Illumina (NASDAQ:ILMN), saw year-over-year growth top 50% in the third quarter.

The problem is that Affymetrix doesn't sell sequencers -- the hot commodity that's flying off Illumina's shelves -- and no one seems to want the genome and RNA analyzers that it does sell. Sales of instruments were down 42%.

The good news is that Affymetrix has been in the business for a long time and therefore has a huge installed base. Its instruments are still being used, and sales of consumable products actually increased versus the year-ago quarter. That'll keep it afloat, but long term, Affymetrix has to increase sales of its machines if it's going to grow revenues.

As pharmaceutical companies like Pfizer (NYSE:PFE) and GlaxoSmithKline (NYSE:GSK) cut back on spending on research and development, Affymetrix's plan is to shift toward offering tests for clinical trials rather than tools for more basic research. Sounds good, but don't expect a turnaround overnight.

Affymetrix is now trading at one-tenth the market cap of Illumina, even though Illumina is expected to have sales only about twice as large as Affymetrix. While that's dirt cheap and might qualify Affymetrix as an ugly stock that's a great opportunity, I'd recommend investors wait until they see signs of recovery, like increasing instrument or test sales, before buying shares.

Pfizer and GlaxoSmithKline are Motley Fool Income Investor newsletter picks. Pfizer is an Inside Value recommendation. Affymetrix is a Rule Breakers selection. Illumina is a Stock Advisor pick. The Fool owns shares of Pfizer. Try any of our Foolish newsletters today, free for 30 days

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool's disclosure policy likes taffy.