Despite market volatility and anemic economic data, the Dow Jones Industrial Average, S&P 500 and NASDAQ improved 1.0%, 1.3% and 0.2% in July, respectively. US equity markets came under pressure due to weak retail and employment figures, as well as mixed earnings reports. Slowing economic data from Japan and China, along with rising Spanish and Italian bond yields, further distressed equity markets and sent the US dollar to a two-year high against the euro. However, investors’ trepidation shifted following discussions for further capital intervention by the European Central Bank. In the US, a sluggish second-quarter GDP growth of 1.5% also raised optimism for additional stimulus actions by the Federal Reserve. For the year, the Dow, S&P 500 and NASDAQ are up 6.5%, 9.7% and 12.8%, respectively.

A majority of companies in the IBO Stock Indexes that reported in July missed analysts’ second-quarter revenue expectations. As a result, three of the four IBO Stock Indexes declined. The Lab Consumables/Equipment, Diversified Instrumentation and Process/Metrology/Motion Instrumentation Stock Indexes contracted 3.7%, 2.2% and 0.4%, respectively. The Laboratory Instrumentation Stock Index improved 0.4%.

Laboratory Instrumentation Stock Index

In July, the Index improved 0.4% to close at 608.43 despite 12 companies posting negative returns and only six advancing. Transgenomic recorded the largest increase, climbing 14%, while Sequenom fell 31%. The Index is up 7.6% for the year, with eight companies rising in value and 10 trading lower. Illumina leads the Index, having risen 36%. Pressure BioSciences has declined 47%.

A number of Index companies lowered EPS guidance. On July 19, Cepheid cut its full-year EPS outlook by more than fourfold to $0.01–$0.04 due to lower margins and currency. Shares fell 17.7% the next day. On July 24, Bruker preannounced average second-quarter EPS well below analysts’ estimates, sending shares down 13.7%. On July 31, the company reduced its full-year EPS goal by 27% to $0.65–$0.70. Waters cut its 2012 EPS outlook on July 24 by 3% to $4.90–$5.10. On July 26, Sequenom fell short of sales and EPS expectations, leading shares down 12.3% the next day.

Challenging the negative-outlook sentiment were Illumina and Thermo Fisher Scientific. Illumina increased its full-year EPS outlook on July 24 by 7% to $1.50–$1.60. Shares traded slightly higher. On July 25, Thermo raised its average full-year EPS guidance by $0.02 to $4.74–$4.84. Shares jumped 8.8% the next day. Earlier in the month, on July 16, Thermo agreed to acquire One Lambda (see page 2) and announced a new $500 million stock-repurchase plan. On the same day, three rating agencies downgraded Thermo’s investment-grade ratings due to the acquisition.

Goldman Sachs downgraded Affymetrix on July 2 from “Neutral” to “Sell.” On July 11, Bruker was cut by JPMorgan Chase from “Overweight” to “Neutral.” Pacific Biosciences was downgraded by Piper Jaffray on July 27 from “Neutral” to “Underweight” and by Morgan Stanley on July 30 from “Equal Weight” to “Underweight.” On July 31, Luminex was downgraded by William Blair from “Outperform” to “Market Perform” but upgraded by Piper Jaffray from “Underweight” to “Neutral.” On July 23, Leerink Swann upgraded Illumina and Luminex each from “Market Perform” to “Outperform.” On July 25, Illumina was upgraded by both Credit Agricole and CLSA from “Sell” to “Outperform.”

Process/Metrology/Motion Instrumentation Stock Index

The Process/Metrology/Motion Instrumentation Stock Index slipped 0.4% to 540.62 this month. Four companies advanced, and three declined. SDIX recorded the largest gain, rising 11%, while MKS Instruments tumbled 9%. For the year, the Index has grown 10.5%, with four firms trading higher and three with negative returns. Veeco Instruments has gained the most value, climbing 72%. SDIX is down 28%.

Nanometrics projected on July 26 an EPS loss of $0.07 to a profit of $0.02 for the third quarter. Shares bounced 6.9% the next day. On July 26, Veeco projected third-quarter EPS of $0.22–$0.38, slightly higher than analysts’ expectations. Shares improved 2.3% the next day. On July 31, MKS increased its quarterly dividend 6.7% to $0.16.

Lab Consumables/Equipment Stock Index

The Laboratory Consumables/Equipment Stock Index fell 3.7% in July to 606.76. Six companies were in negative territory, and two improved, led by QIAGEN, which climbed 5%. Year to date, the Index is up 6.5%, with five companies improving and two declining. Kewaunee Scientific has the highest return, having gained 45%. Enzo Biochem has lost the most value for the month and year, falling 10% and 33%, respectively.

On July 24, QIAGEN raised its full-year EPS range by $0.01 to $1.04–$1.06, leading shares up 5.9% the next day. Conversely, on July 24, Sigma-Aldrich lowered its full-year EPS guidance by 3% to $3.80–$3.90. Shares fell 3.7%. Techne missed EPS expectations on July 31, sending shares down 5.0%. On the same day, Life Technologies tightened its full-year EPS outlook to $3.90–$4.00 from $3.90-$4.05 and announced a new $750 million share-repurchase plan.

Life Technologies was downgraded by Goldman Sachs on July 2 from “Neutral” to “Sell” and by JPMorgan Chase on July 11 from “Overweight” to “Neutral.” Sigma-Aldrich was downgraded by JPMorgan Chase on July 11 from “Overweight” to “Neutral” and by both Credit Agricole and CLSA on July 25 from “Buy” to “Outperform.”

Diversified Instrumentation Stock Index

The Diversified Instrumentation Stock Index retreated 2.2% to 143.75 in July. Four firms dropped in value, led by AMETEK, which fell 7%, and three rose. For the year, the Index is up 9.6%, with all seven companies in positive territory. Illinois Tool Works (ITW) recorded the highest return for the month and year, having gained 3% and 16%, respectively.

Danaher and ITW both lowered full-year EPS guidance due to currency and higher restructuring expenses. Danaher reduced its 2012 EPS guidance on July 19 by 2% to $3.19–$3.26. Shares fell 1.9%. On July 24, ITW lowered its full-year EPS outlook by 4% to $4.03–$4.19. Shares declined 2.4%. Mettler-Toledo reduced its full-year EPS guidance on July 26 by 2% to $9.00–$9.40. Conversely, AMETEK raised its full-year EPS guidance by 2% on July 24 to $1.83–$1.85. Yet shares fell 5.5%. On July 30, Roper Industries increased its 2012 EPS guidance by 2% to $4.84–$5.00 due to the proposed acquisition of diagnostic lab software firm Sunquest.

International

This month, four Pacific Region companies traded lower, and two advanced. Techcomp gained the most value for the month and year, climbing 13% and 26%, respectively, while JEOL fell 11% and 9%, respectively. Four companies are trading higher for the year, and two are in negative territory.

Hitachi High-Technologies reported on July 25 a more than threefold increase in fiscal first-quarter EPS to ¥44.91 ($0.56). The company increased its six-month EPS outlook ending September 30 by 47% to ¥61.80 ($0.78). Shares climbed 5.1% the next day.

In July, nine European companies increased, and four declined. Sartorius led all European companies for the month and year, climbing 11% and 72%, respectively. Alpha MOS fell 16% for the month and is the only European company with a negative return for the year, down 56%.

Scientific Digital Imaging reported on July 24 EPS just above breakeven for the fiscal year ending April 30, compared with a loss of £0.01 ($0.02) a year ago. Shares improved 2.4%. Halma climbed 3.5% on July 25 following a positive trading update. On the same day, Renishaw reported revenue growth for the fiscal year ending June 30 of 15.0% to £331.9 million ($526.8 million) and adjusted EPS growth of 8.0% to £0.96 ($1.52). Shares soared 16.4%. Also on July 25, Sartorius reported second-quarter adjusted EPS growth of 16.9% to €0.90 ($1.15). The company increased its full-year adjusted EBITA growth outlook by 500 basis points to 15%, primarily due to currency. Shares rose 3.2% the next day. Spectris announced on July 27 six-month adjusted EPS growth of 15.9% to £0.58 ($0.92). Shares rose 3.8%.

 Line Graph: IBO Instrument Industry Stock Index

          Lab Instrument Stock Index    S&P 500

 Jun-10   531.11                        247.12

 Jul-10   513.20                        264.12

 Aug-10   499.94                        251.58

 Sep-10   556.95                        273.61

 Oct-10   579.40                        283.69

 Nov-10   589.00                        283.04

 Dec-10   565.27                        301.52

 Jan-11   657.02                        308.36

 Feb-11   661.02                        317.14

 Mar-11   661.90                        317.88

 Apr-11   703.32                        326.93

 May-11   721.22                        322.52

 Jun-11   712.55                        316.63

 Jul-11   676.63                        309.83

 Aug-11   635.47                        292.24

 Sep-11   577.75                        271.27

 Oct-11   602.13                        300.49

 Nov-11   569.85                        298.97

 Dec-11   565.27                        301.52

 Jan-12   628.98                        314.66

 Feb-12   634.89                        327.43

 Mar-12   644.38                        337.69

 Apr-12   637.19                        335.16

 May-12   593.81                        314.16

 Jun-12   605.89                        326.59

 2012                                         2011

 Cos.       Date      FQ    Adj.EPS     Con-          Vs.Est.     Grw.   Adj.EPS

            Rept.                      sensus

 Laboratory Instrumentation   

 AFFX      31-Jul    2Q     ($0.02)    ($0.07)         $0.05      33%    ($0.03)

 BRKR      31-Jul    2Q      $0.12      $0.21         -$0.09     -37%     $0.19 

 CPHD      19-Jul    2Q      $0.02      $0.02          $0.00     -33%     $0.03 

 ILMN      24-Jul    2Q      $0.40      $0.36          $0.04       5%     $0.38 

 LMNX      30-Jul    2Q      $0.07      $0.08         -$0.01     -36%     $0.11 

 PACB      26-Jul    2Q     ($0.40)    ($0.46)         $0.06       5%    ($0.42)

 SQNM      26-Jul    2Q     ($0.26)    ($0.22)        -$0.04     -24%    ($0.21)

 TMO       25-Jul    2Q      $1.22      $1.16          $0.06      23%     $0.99 

 WAT       24-Jul    2Q      $1.17      $1.16          $0.01       8%     $1.08 

 Process/Metrology/Motion Instrumentation     

 NANO      26-Jul    2Q      $0.13      $0.06          $0.07      -72%    $0.47 

 VECO      26-Jul    2Q      $0.37      $0.37          $0.00      -72%    $1.34 

 Lab Consumables/Equipment    

 LIFE      31-Jul    2Q      $0.96      $0.97         -$0.01       8%     $0.89 

 QGEN      24-Jul    2Q      $0.23      $0.23          $0.00      10%     $0.21 

 SIAL      24-Jul    2Q      $0.97      $0.97          $0.00       4%     $0.93 

 TECH      31-Jul    4Q      $0.80      $0.85         -$0.05      -6%     $0.85 

 Diversified Instrumentation     

 AME       24-Jul    2Q      $0.47      $0.46          $0.01      21%     $0.39 

 DHR       19-Jul    2Q      $0.84      $0.81          $0.03      22%     $0.69 

 ITW       24-Jul    2Q      $1.11      $1.10          $0.01      16%     $0.96 

 MTD       26-Jul    2Q      $2.15      $2.14          $0.01      13%     $1.90 

 ROP       30-Jul    2Q      $1.15      $1.15          $0.00       6%     $1.08

 Company: Exchange       Market Value     52 Week        Price      Change    Change         EPS     EPS   LTD/   FY    R&D/

                           (US $000s)    Low    High   7/31/2012   1 Month     YTD    P/E  12 Month  FY   Equity  ROE   Sales

 Laboratory Instrumentation  

 Accelrys: o                $458,877   5.68    8.48    $8.12        0%       21%    NM    -0.38  -0.44    17%    1%    24%

 Affymetrix: o              $293,204   3.68    5.95    $4.19      -11%        2%    NM    -0.46  -0.40     5%    NM    24%

 Becton, Dickinson : n   $15,884,185  69.59   82.45   $75.71        1%        1%    14     5.44   5.59   114%   26%     6%

 and Company

 Bio-Rad Laboratories:n   $2,747,084  84.02  118.00   $96.21       -4%        0%    16     6.19   6.26    49%   10%     9%

 Bruker: o                $1,972,758   9.91   17.10   $11.82      -11%       -5%    21     0.57   0.55    55%   15%    11%

 Cepheid: o               $2,206,563  29.71   46.00   $32.04      -28%       -7%    NM    -0.07   0.04     3%    1%    21%

 Fluidigm: o                $265,326  11.64   18.87   $13.01      -13%       -1%    NM    -0.54  -1.81     2%    NM    33%

 Harvard Bioscience: o      $109,790   3.45    5.25    $3.70       -2%       -4%    41     0.09   0.13    23%    4%     5%

 Illumina: o              $5,515,966  25.57   60.77   $41.47        3%       36%    67     0.62   0.62    73%    8%    19%

 Luminex: o                 $703,426  16.80   25.79   $17.13      -30%      -19%    61     0.28   0.34     3%    6%    18% 

 MOCON: o                    $88,738  12.20   20.40   $15.59        1%       -3%    18     0.88   0.98     9%   16%     6%

 Pacific Biosciences: o     $100,741   1.76   11.37    $1.81      -17%      -35%    NM    -1.85  -2.03     5%    NM   225%

 PerkinElmer: n           $2,915,740  17.45   28.24   $25.55       -1%       28%   639     0.04   0.06    73%    0%     6%

 Pressure BioSciences: o      $2,468   0.20    1.15    $0.32      -20%      -47%    NM    -0.57  -0.77    -1%    NM    98%

 Sequenom: o                $321,883   2.71    7.12    $2.81      -31%      -37%    NM    -0.89  -0.75    18%    NM    96%

 Thermo Fisher n         $20,553,364  43.06   58.37   $55.67        7%       24%    20     2.85   3.46    56%    9%     3%

 Scientific: 

 Transgenomic: o             $64,564   0.70    1.52    $1.03       14%      -20%    NM    -0.03  -0.04    22%    NM     7%

 Waters: n                $6,925,240  70.88   94.47   $77.48       -3%        5%    17     4.68   4.69    71%   35%     5%

 Process/Metrology/Motion Instrumentation           

 FEI Company: o           $1,980,824  26.61   52.01   $47.71        0%       17%    18     2.60   2.51    18%   15%     9%

 MKS Instruments: o       $1,405,061  20.01   34.99   $26.40       -9%       -5%    12     2.15   2.45     3%   13%     7%

 MTS Systems: o             $688,217  28.00   54.82   $43.47       13%        7%    13     3.31   3.24     9%   24%     3%

 Nanometrics: o             $362,692  13.49   20.99   $15.19       -1%      -18%    27     0.56   1.22     7%   14%    10%

 SDIX: o                     $27,249   0.95    2.29    $1.33       11%      -28%    NM    -0.04  -0.01     NM    NM    15%

 Veeco Instruments: o     $1,392,261  20.35   39.63   $35.71        4%       72%    17     2.16   3.11     1%   17%    10%

 Zygo: o                    $337,628   9.40   20.44   $17.88        0%        1%    14     1.30   1.05     2%   15%    10%

 Lab Consumables/Equipment            

 Enzo Biochem: n             $58,238   1.43    3.83    $1.50      -10%      -33%    NM    -0.42  -0.34     0%    NM     8%

 Kewaunee Scientific: o      $30,573   7.90   13.45   $11.85        4%       45%    30     0.40   0.40    39%    3%     1%

 Life Technologies: o     $7,955,751  35.30   50.84   $43.88       -2%       13%    19     2.37   1.99    59%    8%    10%

 Pall: n                  $6,321,501  39.81   64.55   $53.41       -3%       -7%    19     2.81   2.67    55%   21%     3%

 QIAGEN: o                $4,230,468  12.47   18.07   $17.61        5%       28%    43     0.41   0.40    27%    4%    11%

 Sigma-Aldrich: o         $8,442,400  56.18   74.94   $69.20       -6%       11%    18     3.75   3.72    25%   21%     3%

 Techne: o                $2,548,638  62.04   80.17   $69.08       -7%        1%    23     3.04   3.04     1%   17%     9%

 Diversified Instrumentation            

 Agilent Technologies:n  $13,554,660  28.67   46.28   $38.29       -2%       10%    12     3.11   2.85    60%   23%    10%

 AMETEK: n                $7,536,751  20.58   35.21   $31.00       -7%       10%    12     2.53   2.37    75%   19%     3%

 Danaher: n              $37,754,397  39.34   56.45   $52.81        1%       12%    16     3.25   3.11    48%   11%     6%

 Illinois Tool Works: n  $25,874,306  39.12   58.27   $54.34        3%       16%    11     4.80   4.19    48%   21%     1%

 Mettler-Toledo Int'l:n   $4,959,626 126.10  190.02  $154.80       -1%        5%    18     8.52   8.21    98%   35%     5%

 Roper Industries: n      $9,907,110  64.90  108.89   $99.45        1%       14%    22     4.59   4.34    46%   13%     4%

 Teledyne Technologies:n  $2,317,560  44.86   66.29   $62.30        1%       14%     9     6.94   6.84    53%   15%     5%

 Laboratory Instrumentation Stock Index               608.43      0.4%      7.6%    19                    65%   11%     7%

 Process/Metrology/Motion Instrumentation             540.62     -0.4%     10.5%    15                     7%   15%     8%

 Lab Consumables/Equipment Stock Index                606.76     -3.7%      6.5%    21                    41%   12%     7%

 Diversified Instrumentation Stock Index              143.75     -2.2%      9.6%    15                    52%   16%     5%

 Dow Jones Industrial Average                      13,008.68      1.0%      6.5%      

 S&P 500                                            1,379.32      1.3%      9.7%      

 NASDAQ Composite                                   2,939.52      0.2%     12.8%      

                                                     Price         

 Region                    Market Value    Market Value  7/31/2012 Change  Change        EPS        EPS    LTD/   FY    R&D/

 Company                     (US $000s)    (Local 000s)   (Local)  1Month   YTD   P/E  12Month      FY    Equity  ROE   Sales

 Pacific Shares             

 Hitachi HighTechnologies:t  $3,465,717    ¥270,932,082    ¥1,967    1%     18%   15    ¥133.83   ¥103.71   11%    6%     3%

 HORIBA: t                   $1,502,927    ¥117,491,160    ¥2,778    0%     20%   14    ¥204.00   ¥204.41   16%    8%     9%

 JEOL: t                       $178,681     ¥13,968,346      ¥176  -11%     -9%    2    ¥115.60   ¥115.60  102%   63%     5%

 Precision System Science:os    $35,547      ¥2,778,867   ¥30,450    0%      5%   NM    -¥3,272   -¥4,018   41%    NM    14%

 Shimadzu: t                 $2,428,812    ¥189,872,142      ¥642   -6%     -2%   21     ¥30.79    ¥30.79   19%    5%     3%

 Techcomp: hk                   $93,256  HKD 723,075.00  HKD 3.11   13%     26%   83      $0.04     $0.04    7%   13%     1%

 European Shares             

 Abcam: I                    $1,163,198        £742,339     £4.05   -3%     11%   29      £0.14     £0.13     1%   32%    4%

 Halma: l                    $2,339,289      £1,492,906     £3.96   -5%     20%   17      £0.23     £0.23    35%   22%    5%

 Oxford Instruments:l        $1,082,681        £690,954    £12.54    2%     32%   28      £0.45     £0.45    35%   20%    8%

 Renishaw: l                 $1,722,231      £1,099,107    £15.10    8%     50%   16      £0.96     £0.96    29%   28%   14%

 Scientific DigitalImaging:l     $3,130          £1,998     £0.11    2%      2%  105      £0.00     £0.00     0%    1%   10%

 Spectris: l                    $28,677      £1,830,101    £15.47    1%     20%   14      £1.11     £1.07    64%   21%    7%

 Alpha MOS: c                    $4,797         € 3,905     €1.00  -16%    -56%   NM     -€0.05   -€ 0.14    16%    NM   13%

 Analytik Jena: g               $73,016        € 59,440    €11.13    2%      4%   62      €0.18   -€ 0.03    47%    NM   15%

 Sartorius: g                $1,199,223       € 976,248    €52.15   11%     72%   20      €2.66    € 2.44   110%   11%    6%

 Tecan: s                      $792,914     CHF 775,485  CHF 68.0    4%      7%   16   CHF 4.36  CHF 4.36     5%   18%   12%

 Datacolor: s                   $64,755      CHF 63,331 CHF 415.0   11%      5%   21  CHF 20.07 CHF 21.48     7%    0%   12%

 Biotage: st                       $819       SEK 5,575   SEK 7.0   -3%     35%   11    SEK 0.6  SEK 0.46     6%    6%    8%

 Exiqon:  no                    $59,050     DKK 357,679   DKK 9.7    3%      1%   NM  -DKK 0.78 -DKK 0.71     2%    NM   21%