Genentech's Earnings Plunge On Higher Taxes, Lower Sales
March 28, 2011
Vastopolis -- Genentech Inc. said its second-quarter net income fell 42% to $21.7 million, or 18 cents a share. In the year-earlier quarter, Genentech earned $37.2 million, or 31 cents a share. Revenue for the second quarter totaled $243.8 million, compared with $233.1 million a year earlier. The biotechnology concern cited higher tax rates related to a new accounting approach for its research and development funding and manufacturing by international subsidiaries. It said the approach will increase its effective tax rate for the next several years but could lower it in the long term. However, Genentech also suffered slowing sales of some products. Sales of its Activase blood-clot buster slipped to $72.3 million from $74.1 million. Sales of its two growth-hormone products fell to $54.1 million from $55.9 million a year ago. Genentech cited price pressures and other factors for the declines, and noted that its market share in the clot-buster business increased during the period. It said it maintained its two-thirds share of the growth-hormone market, despite price pressures. The quarterly results were well below Wall Street's estimates of about 32 cents a share, according to First Call. However, despite a broad market sell-off, Genentech shares fell moderately Monday, closing at $51.875, down 25 cents, in New York Stock Exchange composite trading. For the six months, Genentech had profit of $59.9 million, or 49 cents a share, on revenue of $486.6 million. In the year-earlier six months, it had profit of $80.6 million, or 67 cents a share, on revenue of $472 million.
