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Celera Genomics



Applied Biosystems


, the wonder twins of genetic research, offered a mixed bag of financial results and outlook Thursday.

Both companies, operating groups of


and leaders in their respective biotech fields, met or beat Wall Street estimates for the fiscal third quarter, but executives didn't answer some of the questions that have weighed them down in recent months.

Biotech observers are watching Celera closely to see if it can transform its tremendous genetic database -- the company is best known for its map of the human genome -- into a money-making business.

Wall Street is waiting for Applied Biosystems, which makes big-ticket equipment for genetic research, to rebound from slowing growth due to economic factors and delays in customer orders.

Before the Thursday opening bell, Celera reported a fiscal third-quarter loss of $29.1 million, or 48 cents a share. Analysts were looking for a loss of 57 cents, according to

Thomson Financial/First Call

. The loss was wider than the year-ago quarter, when the company lost $24.1 million, or 45 cents a share.

Celera's revenue for the fiscal third quarter rose to $23.4 million from $11.1 million in the same period a year ago. Revenue came mainly from the sale of subscriptions to its genetic database to biotech firms and research labs.

But the future outlook given by Celera executives was fuzzy, partly because the company is still in transition mode. The company said revenue for the fiscal year 2001 could double, compared with the prior year, but that it faced "lengthy selling cycles with some of its customers." No specific financial figures were given.

Wall Street is looking for Celera to lose $2.06 a share in fiscal 2001 on revenue of $89.26 million, according to


A big part of Celera's master plan is to use its genetic database as a launch pad into more lucrative businesses such as drug discovery, which involves finding genes or proteins that could make good targets for new drugs. This is the area where biotech observers believe Celera can really generate big profits and long-term value to shareholders, especially through partnerships with large pharmaceutical firms.

But on its conference call with analysts Thursday morning, Celera executives said this transition is still a work in progress.

Eric Schmidt, analyst with

SG Cowen

, believes Celera is as well-positioned as any biotech firm to launch a strong drug-discovery effort.

"Celera has a strong foundation in

genomics, functional genomics and proteomics that can be easily applied to drug discovery," he writes in a research note. "These upstream technologies, when combined with its downstream capabilities, will provide Celera with a long-term competitive advantage in drug discovery." Schmidt rates Celera strong buy, and his firm co-managed the company's

initial public offering.

Shares in Celera were off 46 cents, or 1.2%, to $36.14 Thursday.

The hurdle facing Applied Biosystems is a bit more concrete. Weak overseas currencies, and skittish customers who are postponing equipment orders because of the slowing economy, are hammering the company.

The company reported Thursday that fiscal third-quarter net income rose 3% year over year to $57.7 million, or 26 cents a share. The results matched Wall Street estimates.

Revenue in the quarter rose 19% year over year to $439.9 million.

But the company repeated last month's warning that foreign currency woes and some postponed orders would slow revenue growth for the rest of the calendar year. Specifically, Applied Biosystems executives said weak overseas currencies wiped $11 million and $4.1 million, respectively, off the company's top and bottom lines in the quarter. And some smaller biotech firm customers postponed large standing orders for equipment because of trimmed capital spending budgets.


the company's statement last month, major foreign currencies have continued to decline. Therefore, if current rates hold or if currencies weaken further, a corresponding impact on growth rates is expected," Applied Biosystems executives said today on a conference call.

The company doesn't expect to return to its long-term growth targets of 20% (before foreign exchange differences) until calendar year 2002, they added. No specific figures were given.

Wall Street is expecting Applied Biosystems to earn $1.11 a share in the fiscal year ending in June, according to Thompson Financial/First Call.

Shares in Applied Biosystems were off $1, or 3.4%, to $28.50 Thursday.

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