Applied Biosystems group, the world's number one maker of gene-analysing equipment, warned on Tuesday that it would report lower-than-expected fiscal third-quarter revenue and earnings due to deteriorating business conditions.
In a statement yesterday the company attributed the deterioration to two primary reasons - global political and economic uncertainties arising from the situation in the Middle East, and the delay in government funding for life science research in the United States, Japan and Europe.
Approximately one half of the group's revenues are earned from research funded by governments or private non-profit research organiations. In addition, nearly half of the group's revenues are earned outside the US.
"Fiscal and economic problems faced by governments in all three of our major geographic markets as well as the uncertainty generated by the Iraqi situation are negatively impacting our business even more than we anticipated in January when we provided our last quarterly guidance," said Michael Hunkapiller, president of Applied Biosystems. "It is unclear when labs operated by the National Institutes of Health and academic labs that depend on NIH grants may receive funds appropriated in February for the current fiscal year to purchase capital equipment and certain reagent products. In addition, some customers from other US government agencies have told us they have been instructed to defer scheduled expenditures," he continued.
In Japan, the company expected certain orders to arrive following the supplemental spending bill approval by the Japanese Diet at the end of January, but these have not yet materialised. In Europe, particularly in Germany and France, governments at the limit of the deficit spending ceilings permitted by the euro currency accord have little flexibility to increase expenditures as long as economic conditions remain weak and the global political situation continues to be tense, added the president.