Affymetrix Reports Fourth Quarter and Fiscal Year 2009 Results

Affymetrix, Inc., (NASDAQ: AFFX) today reported its operating results for the fourth quarter and fiscal year ended December 31, 2009. Total revenue for the fourth quarter was $88.8 million, as compared to total revenue of $78.6 million in the fourth quarter of 2008. In constant currency terms, revenue for the fourth quarter 2009 was positively impacted by $2.6 million as compared to 2008. For the full year 2009, total revenue was $327.1 million as compared to $410.2 million, which included a one-time intellectual property payment of $90 million, for 2008.

For the fourth quarter of 2009, product revenue was $81.0 million, which consisted of consumable revenue of $71.9 million and instrument revenue of $9.1 million. Service revenue was $5.9 million, and royalties and other revenue were $1.9 million. This compares to fourth quarter 2008 product revenue of $66.6 million, service revenue of $8.5 million, and royalties and other revenue of $3.5 million.

For the full year 2009, product revenue was $279.2 million, which consisted of consumable revenue of $255.7 million and instrument revenue of $23.5 million. Service revenue was $39.6 million, and royalties and other revenue were $8.3 million. This compares to full year 2008 product revenue of $270.4 million, service revenue of $32.1 million, and royalties and other revenue of $107.7 million, which included an intellectual property payment of $90 million.

Affymetrix shipped 42 systems in the fourth quarter of 2009, bringing its cumulative systems shipped to approximately 1,930.

The Company reported a net income of approximately $2.8 million, or $0.04 per diluted share, in the fourth quarter of 2009. This compares to net loss of $318.7 million, or $4.65 per diluted share, in the same period of 2008 which included a pretax goodwill impairment charge of $239.1 million, or $3.49 per diluted share, and a pretax restructuring charge of $14.3 million, or $0.21 per diluted share.

Fiscal year 2009 net loss was $23.9 million, or $0.35 per diluted share, which included a $17.4 million gain from the repurchase of convertible notes, or $0.25 per diluted share, and restructuring charges of $2.2 million, or $0.03 per diluted share. This is compared to net loss of $307.9 million, or $4.49 per diluted share, for fiscal year 2008 which included a pretax goodwill impairment charge of $239.1 million, or $3.49 per diluted share, and a pretax restructuring charge of $43.7 million, or $0.64 per diluted share.

For the fourth quarter of 2009, cost of product sales was $31.3 million compared to $36.3 million in the same period of 2008. Cost of services and other was $3.7 million compared to $7.0 million in the same period of 2008. Product gross margin was 61.3 percent, as compared to 45.5 percent in the same period of 2008, including the impact of impairment charges of $4.1 million and acquisition-related charges of $0.7 million.

For the full year 2009, cost of product sales was $126.4 million as compared to $126.9 million in 2008. Cost of services and other was $23.9 million compared to $25.2 million in 2008. Product gross margin was 54.7 percent as compared to 53.1 percent in 2008.

For the fourth quarter of 2009, operating expenses were $51.3 million as compared to operating expenses of $313.5 million, which included $239.1 million and $3.6 million of goodwill and other asset impairment charges, respectively, and restructuring charges of $14.3 million, in the fourth quarter of 2008.

For the full year 2009, operating expenses were $209.9 million which included restructuring charges of $2.2 million, as compared to operating expenses of $500.6 million, which included goodwill impairment charges of $239.1 million and restructuring charges of $43.7 million, in 2008.

“In 2009, we successfully executed against the business priorities that we described at the outset of the year, specifically reengineering our technology platform, entering new markets and increasing our operating leverage,” stated President and CEO, Kevin King. “Revenue for the fourth quarter increased 13% over the prior year, driven by an 8% increase in our RNA business and a 30% increase in sales of our genotyping products. In 2010, we expect to generate improved revenue growth and to be profitable for the year.”

Quarterly Highlights

Genotyping

In October, Kaiser Permanente and the University of California, San Francisco (UCSF) entered into an agreement with Affymetrix to conduct genome-wide analyses of DNA samples from 100,000 Kaiser Permanente members for a large-scale research program designed to create a new resource for studying disease, health, and aging. Scientists from the program will use the just-launched Axiom Genotyping Solution™, which delivers high-throughput, automated technology enabling researchers to find novel and common genetic variations associated with complex disease.

Additionally, the Company announced that the Institute for Pharmacogenomics and Individualized Therapy (IPIT) at the University of North Carolina in Chapel Hill is using Affymetrix’s DMET™ Plus biomarker panel to expand the Pharmacogenetics for Every Nation Initiative (PGENI). The PGENI’s mission is to help developing countries use genetic information to improve their drug dosing decision-making process.

Affymetrix' management team will host a conference call on February 3, 2010 at 2:00 p.m. PT to review its operating results for the fourth quarter and fiscal year 2009. A live webcast can be accessed by visiting the Investor Relations section of the Company’s website at www.affymetrix.com. In addition, investors and other interested parties can listen by dialing domestic: (866) 500-AFFX, international: (706) 643-2771.

A replay of this call will be available from 5:00 p.m. PT on February 3, 2010 until 8:00 p.m. PT on February 10, 2010 at the following numbers: domestic: (800) 642-1687, international: (706) 645-9291. The passcode for both replays is 50159245. An archived webcast of the conference call will be available under the Investor Relations section of the Company's website at www.affymetrix.com.

About Affymetrix

GeneChip^® microarray technology is the industry-standard tool for analyzing complex genetic information. After inventing the technology in the late 1980s, Affymetrix scientists have been dedicated to developing innovative products that provide researchers with a more complete view of the genome. These products accelerate genetic research that will allow physicians to develop diagnostics and tailor treatments for individual patients by identifying and measuring the genetic information associated with complex diseases. Today, Affymetrix technology is used by the world's top pharmaceutical, diagnostic, and biotechnology companies, as well as by leading academic, government, and non-profit organizations. Affymetrix has installed almost 1,950 systems around the world and more than 21,000 peer-reviewed papers have been published using its microarray technology. Affymetrix is headquartered in Santa Clara, California. For more information about Affymetrix, please visit the company's website at www.affymetrix.com.

All statements in this press release that are not historical are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act as amended, including statements regarding Affymetrix' "expectations," "beliefs," "hopes," "intentions," "strategies" or the like. Such statements are subject to risks and uncertainties that could cause actual results to differ materially for Affymetrix from those projected, including, but not limited to: risk relating to the company’s ability to successfully commercialize new products, risk relating to past and future acquisitions, including the ability of the company to successfully integrate such acquisitions into its existing business; risks of the company's ability to achieve and sustain higher levels of revenue, higher gross margins and reduced operating expenses; uncertainties relating to technological approaches, risks associated with manufacturing and product development; personnel retention; uncertainties relating to cost and pricing of Affymetrix products; dependence on collaborative partners; uncertainties relating to sole-source suppliers; uncertainties relating to FDA and other regulatory approvals; competition; risks relating to intellectual property of others and the uncertainties of patent protection and litigation. These and other risk factors are discussed in Affymetrix' Form 10-K for the year ended December 31, 2008, and other SEC reports, including its Quarterly Reports on Form 10-Q for subsequent quarterly periods. Affymetrix expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Affymetrix' expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

PLEASE NOTE:

Affymetrix, the Affymetrix logo, GeneChip, and all other trademarks are the property of Affymetrix, Inc.

Contact:

Affymetrix, Inc.
Doug Farrell, 408-731-5285
Vice President of Investor Relations