[Updated: 6:45 am, 10/26] San Diego-based Illumina is doing some restructuring to make up for third-quarter sales that fell way short of investors’ expectations.
The market-leading maker of DNA sequencing instruments (NASDAQ: [[ticker:ILMN]]) said today it is going to restructure (i.e., make job cuts) that will add up to a $15 million to $17 million charge on the company’s income statement, mostly in the fourth quarter. The disclosure was part of the company’s third-quarter financial report, in which Illumina said it generated $235.5 million in revenue—a 1 percent drop compared with the same period a year ago. The company’s quarterly profits plunged to $20.2 million, a 43 percent decline from $35.4 million a year earlier.
[Updated layoff numbers] Illumina didn’t provide details of its restructuring plan in today’s financial release, although it did say in a subsequent filing it is eliminating 200 jobs, or about 8 percent of its workforce. It also declined to offer a specific revenue forecast, although the company did say it expects sales to be higher this quarter than last quarter because of the commercial rollout of a new desktop sequencing instrument called MiSeq.
News of cutbacks shouldn’t come as a surprise. The company first reported that its sales were falling short—about $40 million short of Wall Street expectations—in an announcement on Oct. 7. Researchers who buy Illumina products are still uncertain about how they will be affected by the possibility of budget cutbacks at the National Institutes of Health.
“We view the move as likely prudent, although the expectation points to a bearish outlook on HiSeq,” said Tycho Peterson, an analyst with JP Morgan, in a note to clients this morning, that referred to the company’s flagship instrument.
Illumina had 2,100 employees as of January 2, according to its annual report filed with the Securities & Exchange Commission.
