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Molecular Devices Falls on Weak Profit, Sales

April 11, 2001|From Bloomberg News

Shares of Molecular Devices Corp. plunged 58% Tuesday after the medical-instruments maker reported disappointing first-quarter profit and said sales would slow as drug makers put off buying big-ticket research equipment.

Molecular Devices, which makes measuring systems used for drug research, fell $28.99 to close at $21 on Nasdaq. At least four analysts lowered ratings on the stock after the company reduced its financial forecast.

The Sunnyvale, Calif.-based company blamed economic uncertainty for the results, which caused pharmaceutical and biotechnology companies to delay purchases. Capital spending on big-ticket items is often the first to go during a slowdown, analysts said.

"Big pharma and big biotech are being careful about their capital expense budgets in this economic environment," said Scott Greenstone, an analyst with Thomas Weisel Partners. "You would have to question why people would reduce spending at this juncture, when so much research needs to be done that affects product pipelines."

Greenstone dropped his rating of Molecular Devices' stock to "market perform" from "strong buy."

Molecular Devices said most of the shortfall involved systems that screen drug activity in cells, which cost $80,000 to $100,000.

Molecular Devices said net income rose to $1.6 million, or 10 cents a share, from $1.2 million or 8 cents, in the year-earlier period. Per-share earnings were half the 20-cent average estimate of analysts surveyed by First Call/Thomson Financial.

Sales rose 2.5% to $20.7 million from $20.2 million. The company had projected sales of $26 million to $27 million in the first quarter.

The company said it expects to earn 16 cents to 18 cents a share during the second quarter, compared with the 27-cent First Call estimate. For the year, the company said it expected to earn 70 cents to 80 cents a share, well below the $1.22 estimate.

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Trickle Down

A slowdown in capital spending by big drug and biotech companies is starting to affect vendors such as Molecular Devices, which makes medical instruments.

Tuesday: $21.00, down $28.99

Source: Bloomberg News

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