It's too bad you can't spell "ugly" with the four single-letter codes for the bases that make up the sequence of DNA, because that was exactly what Illumina's (NASDAQ:ILMN) earnings release yesterday was. U-G-L-Y! The only question is whether the ugly runs all the way through, or whether there might be some beauty under the surface.

Revenue rose by 5% year over year, but for a company that has grown revenue by more than 50% annually over the past five years, that measly below-guidance increase just isn't going to cut it.

It continues to be a tale of two business segments for Illumina, with sales from the consumables used in its sequencing machines more than doubling, while its array business remains down considerably. Consumers are waiting to begin new projects, because they're expecting next-generation array products that will be able to test 5 million genetic variations using data from the 1,000 Genomes Project. To spur things along, Illumina is planning on launching new chips as the data becomes available from the 1,000 Genomes Project, and it will offer supplemental chips as more data becomes available.

Despite the strong showing, the sequencing products weren't without their own issues this quarter. A manufacturing problem, which has been resolved, resulted in a loss of $6 million to $8 million in revenue in the third quarter, and it could hurt revenue by as much as $15 million in the fourth quarter as the company replaces defective reagents.

Despite the ugly quarter, I do think there's some beauty under the surface. Illumina wasn't willing to pin down when stimulus money from grants through the National Institute of Health will come in -- Waters (NYSE:WAT) said it expects to start seeing money in the fourth quarter -- but the important thing is that Illumina will eventually see a benefit from the long-awaited stimulus.

Most importantly, the company continues to sell more sequencers -- a record number for the quarter -- and believes that it has more than 50% of the market, handily beating competitors Roche and Life Technologies (NASDAQ:LIFE). Like other companies with razor-and-blade business models -- Intuitive Surgical (NASDAQ:ISRG), Hewlett-Packard (NYSE:HPQ), and, of course, Procter & Gamble's (NYSE:PG) Gillette -- the installed base of systems will drive the sales of consumables in future quarters.

Assuming, of course, that the company doesn't run into any other manufacturing issues.

Illumina is an active Stock Advisor pick. Let Fool co-founders David and Tom Gardner show you their top stock picks absolutely free with a 30-day trial.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Intuitive Surgical is a Rule Breakers selection. Procter & Gamble is an Income Investor pick. The Fool owns shares of Procter & Gamble and Waters and has written a "strangle" on shares of Waters. The Fool has a disclosure policy.