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Invitrogen Plans Refocusing

Shares fall 14% as growth slows.
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Invitrogen

(IVGN)

sank 14% Friday after third-quarter results showed growth is slowing.

The Carlsbad, Calif., biotech lost $130 million, or $2.53 a share, for the quarter ended Sept. 30, reversing the year-ago profit of $24 million, or 42 cents a share.

The latest quarter was hit by a $150 million goodwill impairment within the Cell Culture Systems segment.

On a pro forma basis, excluding certain costs, latest quarter earnings rose to 87 cents a share from 80 cents a year earlier.

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Revenue rose 7% from a year ago to $311 million.

Analysts surveyed by Thomson Financial were looking for an 89-cent profit on sales of $311 million.

"After three consecutive years of double-digit revenue and earnings growth, we had expectations to achieve similar results this year," said CEO Greg Lucier. "That has clearly not happened.

"As a result, we are executing plans to refocus the business on those areas where either science or our leading brand can provide meaningful differentiation," Lucier said. "These actions include focusing on improving our go-to-market strategy in regional markets to ensure our sales growth matches the leading reputation we hold for being the quality and technology leader in scientific tools, completing the acquisition integrations, and responsibly reducing our cost structure. These action plans will set the company up for a solid year of execution in 2007."

Pro forma operating margin was 22% of revenues in the third quarter of 2006 vs. 24% in the third quarter of 2005.

The decline was driven by a decrease in gross margin, which was partially offset by a reduction in the accrual for incentive compensation due to the company's expected full-year performance.

Shares fell $9.06 to $56.58.