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