Twelve of the 21 companies in the IBO Laboratory Instrument Sales Index reported fourth-quarter earnings before this issue’s publication. For these companies, revenues grew 7.5%, operating profits climbed 11.0% and operating margins improved 80 basis points to 21.0% of sales. Total fourth-quarter revenue and operating profits for the Index are estimated to have grown 5%–6% and 9%–10% to $4,936 million and $917 million, respectively. Operating margins are projected to have improved 60 basis points to 18.6% of sales. Full-year revenue and operating profits are projected to have declined 3%–4% and 1%–2%, respectively.

Affymetrix’s fourth-quarter revenues jumped 13.0%, 9.7% on a currency-neutral basis, to $88.8 million (see page 12). Product sales climbed 21.6% to account for 91% of sales, including Consumable and instrument revenue growth of 16.9% and 78.4% to $71.9 million and $9.1 million, respectively. For consumables, RNA revenue grew 8% to $44.9 million and DNA revenue grew 30% to $25.0 million. Gene Titan systems’ installed base totaled 45 systems. Product sales were comprised of 75% for RNA and 25% for DNA analysis. The company shipped 42 systems and scanners for total cumulative shipments of 1,930. Services revenue declined 31.1% to $5.9 million. Royalty and Other revenue fell 44.1% to $1.9 million. Adjusted operating income was $2.3 million, compared to a loss of $24.5 million a year ago. Gross profit margin soared nearly 16 percentage points to 60.6% of sales due to reduced restructuring-related charges and a shift in product mix.

For the year, Affymetrix’s revenues grew 2.1% to $327.1 million, excluding a one-time intellectual property payment in 2008. Product and Services revenues improved 3.3% and 23.3% to $279.2 million and $39.6 million, respectably. Royalty and Other revenue fell 53.0% to $8.3 million, excluding the one-time payment. Consumables revenue grew 2.7% to $255.7 million, with DNA and RNA sales accounting for 34% and 63% of consumables sales, respectively. The company recorded an adjusted operating income loss of $31.4 million, compared to a loss of $43.5 million last year. Adjusted gross profit margins improved 155 basis points to 54.0% of sales. First-quarter revenues growth is expected to be flat at $78 million due to a 50% decline in Services revenue and Product revenue growth of 8%–10%.

Fiscal second-quarter sales for Dionex climbed 5.9% to $109.2 million (see page 12), but declined 11.3% on an organic basis. Currency transactions and acquisitions contributed 7.3% and 4.0% to revenue growth, respectively. On a reported basis, demand from the environmental, life sciences, food and beverage, and electronics markets increased. Demand from the petrochemical and power markets declined. Ion chromatography sales grew in the low single digits, benefiting from higher sales in Asia/Pacific. HPLC sales grew in the mid-teens, but were flat excluding the ESA (see IBO 9/30/09). North American sales grew 5.5%, 4.9% on a currency-neutral basis, to account for 27% of sales. Excluding ESA, sales declined 9%. European sales improved 3.9% to make up 41% of sales, but fell 7.9% on a currency-neutral basis. Sales to Asia/Pacific climbed 9.0%, 2.3% on a currency-neutral basis, to represent 32% of sales, and were led by Japan, Korea and India. Operating profit contracted 7.3% to $24.0 million due to increased SG&A expenses as a percentage of sales. Gross profit margin declined 140 basis points to 66.1% of sales. Dionex increased its full-year revenue guidance by 1% to $413–$420 million for average growth of 8%. For the third quarter, sales are projected to grow 17% to $109–$113 million.

Fourth-quarter revenues for Illumina grew 12.2% to $180.6 million (see page 12). Product and Service revenues rose 9.6% and 61.1% to represent 93% and 7% of sales, respectively. Sequentially, revenue grew 14.0%. The fourth quarter contained an extra week compared to last year. Strong demand for sequencing products boosted total consumable sales 6% to $105 million. Array sales, which accounted for over half of consumable revenue, fell due to lower sales of whole-genome genotyping arrays. The company revised its revenue impact from sequencing reagent quality issues to $4–$5 million from the previously projected amount of up to $15 million. Instrument sales grew 19% to $61 million driven by sequencers. The company ended the year with record backlog orders of $228 million, including $16 million in fourth-quarter orders from stimulus funding. Adjusted operating profit slipped 3.5% to $37.4 million. Gross profit margin improved 440 basis points to 70.4% of sales, including stock compensation expenses. Excluding these expenses, adjusted operating profit grew 6.5% to $53.8 million, and gross profit margin climbed 444 basis points to 71.2% of sales.

For the year, Illumina’s revenues grew 16.2% to $666.3 million, including a 17.8% increase in Product revenue and a 4.3% decline in Service revenue to account for 94% and 6% of sales, respectively. Including stock compensation expenses, adjusted operating profit climbed 20.0% $143.6 million, and gross profit margin jumped 500 basis points to 69.1% of sales. Excluding these expenses, adjusted operating profit jumped 22.2% to $204.4 million, and gross profit margin improved 490 basis points to 69.9% of sales. Full-year 2010 revenues are projected to grow 20% to $799 million.

Luminex’s fourth-quarter sales jumped 35.4% to $38.2 million (see page 12), led by 26% and 137% growth for assay and system sales, which accounted for 24% and 34% of sales, respectively. The company reported the shipment of 253 systems, including the sale of 15 FlexMAP 3D systems. Consumable sales fell 4% to account for 21% of sales, but grew 33% sequentially. Royalty revenues grew 18% to make up 13% of sales, and Service and all Other revenue accounted for 8%. Revenue for the Technology and Assay Groups grew 12.3% and 118.3% to make up 65% and 35% of sales, respectively. Operating profits jumped 146.0% to $5.5 million, including $2.7 million and $2.6 million for the Technology and Assay Groups, respectively. Gross profit margins declined 221 basis points to 67.2% of sales due to a shift in product mix.

Full-year revenues for Luminex grew 15.5% to $120.6 million, including a gain of 4.6% and 59.3% for the Technology and Assay Groups to account for 72% and 28% of revenues, respectively. Systems and assay revenue grew 9% and 66% to make up 25% and 26% of sales, respectively, while consumables sales fell 11% to account for 24%. Cumulatively, instrument shipments totaled 6,767. Royalty and all other revenue grew 9% and 13% to account for 15% and 5% of sales, respectively. Service revenue amounted to 5% of sales. Operating profit jumped 120.7% to $7.4 million, including $8.1 million for Technology and a loss of $0.7 million for Assay. Gross profit margins fell 55 basis points to 67.4% of sales. For 2010, revenues are expected to grow in the high teens to mid-20s to more than $138 million.

Column Graph: Quarterly Sales Performance January 2006—December 2009

Year Q1 Q2 Q3 Q4

2006 3638 3588 3710 4067

2007 4073 4064 4229 4671

2008 4520 4632 4543 4662

2009 4258 4203 4358 4936

Column Graph: Quarterly Operating Profit MarginsJ anuary 2006—December 2009

Year Q1 Q2 Q3 Q4

2006 15.1% 13.6% 15.3% 17.2%

2007 16.2% 15.2% 15.9% 18.1%

2008 16.6% 16.3% 17.4% 18.0%

2009 16.4% 17.0% 17.4% 18.6%

IBO Laboratory Instrument Sales Index companies: Affymetrix, Agilent Technologies (Chemical Analysis, Life Sciences), Analytik Jena AG, Bio-Rad Laboratories (Life Science), Bruker, Dionex, Harvard Bioscience, Horiba (Analytical Instruments), Illumina, Life Technologies, Luminex, O.I. Corp., Oxford Instruments (Analytical), PerkinElmer, QIAGEN NV, Shimadzu (Analytical and Measuring Instruments), Strategic Diagnostics, Tecan, Thermo Fisher Scientific (Analytical Technologies), Varian (Scientific Instruments) and Waters.