Revvity Inc (RVTY) 2001 Q1 法說會逐字稿

Good day everyone and welcome to this first quarter 2001 conference call for PerkinElmer. Today's conference is being recorded. At this time, for opening remarks and introduction, I would like to turn the conference over to the Vice President of Investor Relations and Corporate Communications, Ms. Diane Basile. Please go ahead madam.

Thank you. Good morning and welcome to the PerkinElmer first quarter 2001 earnings conference call. If you have not received a copy of our earnings press release, you may get one from visiting our web site at www.perkinelmer.com on the first call network or from our toll free investor hotlines 1877-PKI-NYSE. As we discuss the operating profits and earnings per share today consistent with our presentation and discussion in prior quarters, we will focus on results on a continuing basis adjusted for a number of items. These results exclude non-recurring items such as acquisition charges, gains, restructuring charges, and exclude the amortization of goodwill and intangibles, as we believe this provides the most useful comparative information for our businesses. Our reconciliation of adjusted net income and reported net income can be found on page 6 of the press release. Before we begin, we will need to remind everyone of the following safe-harbor statement. Certain remarks that we may make about management's future expectations, plans, and prospects may constitute forward-looking statements about the company's performance that involve risks and uncertainties. These forward-looking statements are only predictions and may differ materially from actual future events or result. Further, we assume no obligations to update these statements. Please refer to the documents filed by the company with the SEC, specifically our most recent report on Form10-K, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. Now, I will introduce the Chairman and Chief Executive Officer, of Perkin-Elmer, Gregory L. Summe.

Thanks Diane. Good morning everyone. I appreciate you taking the time to join us today to talk about our first quarter 2001 results. With me also is Robert F. Friel. I will start by covering the first quarter highlights, Rob will then review the financial results in detail and will break for questions and answers before we close the call. In spite of an uncertain economic environment, we delivered very strong earnings growth in the first quarter. Our net income increased 21% over the first quarter of 2000, which marks the 14th consecutive quarter of double-digit earnings growth for Perkin-Elmer. Our revenue grew 6% over last year's first quarter and 8% adjusting for the strength of the dollar. While this revenue growth was slower than expected, we are operating at a difficult economic environment and believe that much of the softness is the result of purchase deferrals, sort of anxiety, and reaction to the economic uncertainty rather than any fundamental weaknesses in our businesses. Our operating margins increased 280 basis points to 14.3%. Looking at organization operational progress, we believe our ability to achieve these results is a real testament to the strength of our management operational processes, the depth of our organization, and our focus in driving quality and productivity. We sensed signals of a softening economy in late of last year and began to immediately take actions to offset that impact on our earnings. During the first quarter, we reduced our personnel levels by over 400 people. Furthermore, we did this while continuing to invest in growth, particularly, in strengthening the quality and depth of our organization. For example, in Research and Development we have added over 80 new engineers and scientists during the last six months in just Life Sciences and Optical Electronics. We now have over 400 black belts and green belts in our Six Sigma Program. We also initiated our Asia-Pacific Leadership Program, where we recruit future leaders from the top six technical universities in China, Singapore, and Indonesia. Since 1998, our Asian personnel has increased by over 1200 people, as we continue to ramp up our proven high quality, low-cost production which we have been building for more than 10 years. But, overall, the ever-increasing bandwidth of our organization has enabled us to continue to drive aggressive change and react quickly to the market conditions. Strategically, we continue to reposition our portfolio for growth. In addition to hiring more engineers and scientists, we have increased R&D spending and our investment in training our people in design for Six Sigma in time to market. This has given us better traction and new product introduction. For example, at the OFC conference, our new 10-gigabyte receivers, 512 MUX arrays, and portable chromatic dispersion test equipment was very well received. Our new internet-based networking product called Sombrilla, which we introduced at FITCON is also gaining rapid acceptance now with medical instruments. In addition to our internal new product development during the quarter, we announced several acquisitions and alliances, which while small in revenue are important technology platforms. We acquired the Labworks software platform, which compliments our own laboratory information management software that lends capability. We acquired applied surface technology, which strengthened the best in the higher value added semiconductor processing and expands the consumables and service offerings to semiconductor manufacturers. And in telecom, we announced the partnership of SENAX to jointly develop high-speed receiver technologies for advanced optical networks. This cooperation involves the design and development of detector chips, high-speed electronics in packaging for 10 and 40 gigabyte optical networking systems. The net effect of this progress is that our highest growth businesses continued to become a larger and larger portion of our overall portfolio. Given the strength of our business portfolio, the capability of our management process, the depth of our organization and our ability to continue to drive productivity-given quality progress, we are reaffirming our cash EPS guidance for 2001 at 305-308. I will now turn the call over to Robert Friel, who will take you through our financial results in greater detail.

Thank you Greg. This morning I am going to take you through our financial results for the quarter, discuss goings for the rest of the year. We reviewed some of the actions we have taken to proactively manage our cost during this time of fairly uncertain economic conditions. First, if you turn to page 4 of the press release, I would like to briefly review our first quarter results. Revenues for the quarter improved to 426 million from 402 million, up 6% over the first quarter 2000. The stronger dollar to gross revenue growth by 2%, while the net impact of acquisitions in the quarter positively impacted revenue of about 3%. Organic growth therefore was 5%, which we will detail by segment shortly. Cost to sales was basically flat an absolute dollars at 246 million with 6% higher revenue resolving in a 300 basis point improvement in gross margins, to 42% from 39%. Our limelight is focussed on reducing the manufacturing cost across all the SPU and a thorough mix of reagents and consumables in the Life Sciences and Instrument businesses throughout this favor ability. R&D spending was 12% year-over-year and was almost 6% in sales. You know, that we are operating under aggressive cost containment guideline. We remain committed to increasing R&D spending during the year, continue to drive our topline growth as well as parting our spending in the highest growth markets which are life sciences, telecom, and digital imaging. SG&A remains flat, as a percentage of revenue was 22%. We continued to invest in improving our sales and service organizations, while aggressively attacking our general administrative cost. So, our percentages remained flat. The spending has shifted from G&A to Sales. All our businesses are investing in this aspect to maximize the effectiveness of our frontline employees. Examples include centralizing our Customer Care Center in Europe to provide better-combined technical support, perpetrating our field service managers, expanding the business channels, and redefining how we go to market. While these activities have increased our start in the marketing expenses, we have all set these by reducing our back office support through organization and consolidation. You can get a good sense of this by looking at the change in head count within Life Sciences in the first quarter. From Q1 they reduced their overall census, but increased revenue-producing resources by adding 47 sales services in R&D people, while reducing administrative personnel by 53. Operating income increased to 61 million from 46 million in Q1 2000, 32% on 6% revenue growth. This resulted in operating margins expansion in 280 basis point to 14.3%. This was the ninth consecutive quarter greater than 100 basis point operating margin expansion, and we continue to feel confident in our ability to drive significant margin improvement. Not only because of the opportunities we see, but more importantly, as the organization continues to strengthen so is our ability to execute. Other expenses increased 5 million largely due to the increase in the interest expense, related to the acquisition of NEN in Life Sciences. Our tax rate was 31% consistent with previous guidance. The net income of $32.6 million is up 21% over prior year and this is in the company first quarter record. EPS is 63 cents is up 17% over the 54 cent reported in Q1 2000 and exceeds to three consensuses of 62 cents. As Greg mentioned, this is our 14th consecutive quarter of double digit EPS growth and represents 2.5 times the EPS of the company three years ago. For full turnings of the businesses, I would like to point out the page 6, we reconcile our adjusted income from operation to reported and diluted EPS. As Diane mentioned, we exclude Goodwill and intangible amortization as well as nonrecurring items. In Q1, we had in process R&D vitals of roughly 2.5 million relating to the acquisition of applied surface technology. In addition, we recognized the third gains of 3.2 million from reserves previously established from companies relating to prior dispositions. These were favorably resolved over the last quarter. You would now turn to page 5 of the press release; I would like to review our results by segment. In Life Sciences revenue for the quarter was 69 million of 75% over Q1 last year, largely due to the inclusion of the NEN Life Sciences acquisition. Organic growth in the quarter was 8%, the drug discovery of 7%, and genetic screening expanding of 11%. Reagents in consumables, which make up about 70% of the Life Science revenue, grew double digit while our sale of our instruments actually decreased slightly relative to Q1 last year. We believe this is largely due to some customers deferring capital spending given the economic uncertainty. We also believe that the continuing consolidation of Pharmaceuticals Companies is also temporarily impacting demand as a new combined entities, solely our capital budgets and spending priorities. Having said that number of products did particularly well on Q1. For us in space assays, through this screen and genetic screening are record quarter in shipment of screening tests. We also made great progress in expanding the geographic reach of our genetic screening business. We reached an agreement with Lab India, to accelerate the implementation of newborn screening in India, which is 27 million births annually. In addition, we had in the state of Washington and New Jersey, the list of PKI customers, so that we are now supplying new nail testing in 38 states and the interest continues to grow up. Operating margins in Life Sciences for the quarter expanded 300 basis points to 15.2% driven by the higher percentage of reagents and lower manufacturing cost. As I mentioned before, the margin expansion was achieved while significantly increasing R&D and installing expenses. Also, during the quarter, we completed the integration of the NEN and historical Life Sciences sales forces. Given the risk of disrupting the sales force in Q4, we deferred integrating the front line employees until Q1. The methodology behind merging a few sales forces was that we used this as an opportunity will improve the effectiveness of our sales organization and lavishly combined scale. This has resulted in dramatically changing how we go to market and provides support for global customer base. We had previously been organized by geographic region in US and Europe. We are now organized by key customer segments. This allows us to have specialists in high comfort screening going on the large Pharma Companies and individuals now in genomics falling on the bio-effects. Previously, both customers on the same geographic region, one individual called on both. By making this change, we leverage our scale and provide better service to our customers as well as increase our ability to provide more tailored total solutions including the instrument reagent software, as our sales force will be more application focussed. The change of this magnitude resulted in about 70% of our sales force changing roles and own responsibilities. While the impact of this type of changes is difficult to quantify, we believe this probably impacted our growth rate 4-5%, and we are very happy to have this behind this. More importantly we believe that the decisions as extremely well going forward and continue to gain share in the Life Science markets. Turning out to electronics, revenue in the quarter was 121 million of 6 million over the prior year, adjusting for business invested last year on foreign exchange, organic growth was 10% driven by telecom and digital imaging. In our telecom incentive business revenue grew an excess 30% and as our fiberoptic component business and our network testing and monitoring business both more than totalled in the quarter, a significant accomplishment given the market coercion occurring in the industry. During the quarter, we continued to expand our capabilities and product offerings in high-speed receivers in the system monitoring solutions. Greg mentioned the CENIX collaboration in reference to our new product offerings. In addition, we successfully transferred production of our 2.5-gigabit APD Minigil products to our proven Asian Operations, giving us the high quality, low cost advantage, as well as flexible and easily scalable production. While we expected to be a challenging market for the rest of the year, we believe our proven low cost, high quality Asia manufacturing capabilities combined with a higher speed receiver technology positions us well as market transitions from long hall to metro and access where there will be more emphasis on lower costs per bit. However, the imaging revenue was down slightly, despite strong growth in our digital imaging business where we shipped 80 or more of silicon panels in the quarter. This flat panel technology was awarded the Photonic Tech Brief procedures, product of the year gold award and we continue to expand the application for this proprietary technology. Our lining business grew mid single digit in the quarter driven by strong double-digit growth in our medical offerings. Partially offset by lower sales in our total lithography product sold in the semi-conductor markets, as well as lack of growth in our leading products sold into the staging, studio, and in the entertainment market. Our electronic operating margins expanded over 300 basis points to 16.7% driven by material savings, higher margins telecom revenue, and aggressive restructuring taken during the quarter. As within the cake of Life Sciences optoelectronics increased R&D and installing expenditures during the quarter. Turning to instruments, revenue in the quarter was a high up to $ 166 million down 20 million from 02/01/2000 due largely to the sale of our Berthhold business in Q4 last year as well as the stronger US dollar. On an organic basis, instruments were down 2% reflecting softness in the aviation security markets served by our detection systems business. Our analog and instrument business was up 3% organically with double-digit growth in the US and Asia. We saw particularly nice growth in chromatography in our optima product clients. In addition, our service business grew by 6% this quarter, which is an area we have focussed on. Service now represents 26% of our revenue up from 23% in Q1 2000. Analog instruments successfully launched a number of new products during the PKI conference and we will continue to push our new product pipeline to reorganize the revenue growth. In addition, the acquisition of lab works announced in the quarter provide us a very effective platform to link multiple instruments from a wide range of manufacturers as well as leverage our own extensive relay of technology offerings. Operating margins expanded 60 basis points in the quarter as aggressive productivity actions were taken particularly in detection systems. The analog instruments business penetrated from low administrative cost, material cost productivity, and improved manufacturing quality. During Q1, we now turn attention to increase our production in Singapore, which is expected to be completed in Q4 and should further reduce our operating cost and simplify our supply chain. Fluid Sciences achieved revenue of 70 million in the quarter up 12% on an organic basis. Strong growth in aerospace and power generation was offset by softness in the semiconductor market. Growth in systems and component for regional and business aircraft and spares and repair orders were strong in the commercial and military markets. In the Power Generation Market strong growth was driven by global demand for turbine generators. Semi-conductor revenues rose modestly year-over-year, despite the onset of a downturn in the semi-conductor equipment market. On that point, during the quarter, we have acquired a pipe service technology, which will allow us to stand our consumable at the market content and provide greater value added services to our semi-conductor customers with an offering that we believe will be resilient to swings in the semi conductor fab equipment market. Operating margins improved 500 basis points to 23% due to the strong aerospace growth and productivity gains across the business as the Six Sigma Lean manufacturing and supply line management initiatives continued to deliver significant bottom line benefit. We will continue our aggressive cost reduction and factory rationalization actions to further drive cost productivity. With regard to the guidelines for the rest of the year, it is becoming increasingly difficult to forecast revenue with any significant degree of certainty. Consequently, we have broadened the range of our guidance. Starting with Life Sciences, we are forecasting organic growth for the year of 12-17% or $320-340 million, up from Q1, as we believe our customers will return to more consistent buying habits and have recently redesigned sales organization to provide us a competitive advantage. We believe operating margin will range from 17.5%-18.5%. Optoelectronics will grow 10-15% organically over 540-565 million with operating margins 17.5%-18.5% on the strength of telecom and digital imaging. Instrumental organic growth is forecasted being in the 2%-7% or 699 million to 720 million range, as our analog instrument business should benefit from the recently introduced new products with detection, as easier comparison for the second half of the year. Operating margin in instruments is forecasted to be at 11-12% and we the forecast for Fluid sciences to grow organically in the 3-8% or 265-280 million range as we do not expect semi-conductor markets to recover this year, and aerospace and power generation grow mid steam. Operating margin for Fluid Sciences will be in the 19.5-20.5% range. So the total company-operating margin should come in the range between 14.5-15.5% and topline organic growth looks to be between 6 and 10% or 1.82 billion to 1.9 billion. Having recently completed our rigorous quarterly operating reviews, we remain confident that we will earn $3.5 and $3.8 for the year even at the bottom-end of our revenue projection. In addition to actions are already taken, we see significant opportunity to further improve operating margins. To give you some perspective this quarter, we reduced our expenses by slightly over 400 million and by June we will have reduced by another 500, close 10 administrative offices and consolidate four manufacturing sites. This is all excluding the instrument shipped to Singapore, which will be completed in Q4. And now, we aggressively attack our administrative and manufacturing cost. We will not lose sight of the need to continue to bring new products to the market. We will plan to increase the R&D and installing expenditures 15 million and 9 million respectively in the year hiring a 100 R&D and sales people and introducing 17 new products. Now, I will open it up to your questions. Thank you sir, today's question and answer session will be held electronically. If you would like to signal to ask the question, please press the * key, followed by digit #1 on your touchtone telephone. Once again, *1 for questions and we will take our first question from Vivek Khanna of UBS Warburg.

Hi, good morning, I have a question in terms of the cost savings from rationalizing the head count, can you give us, Greg, some sense of what the annualized impact from that is, I realize we wont get all of this year, but what is the annualized impact.

Yeah! I think for the year we are looking at the $12-15 million range.

How much of it do you think we will get this year?

No, I think that is the shift benefit.

Okay, next year, we will get some part of that I guess?

The next year it will be bigger, more to 15-20.

From this. Okay that's great. How is your conviction on the Life Sciences acceleration, do you think 12-17 for the year and you are only up about 8 in the first quarter, what gives you some confidence in those numbers, other than, you know, I mean I will stop there?

Well, it is a couple of things. One we did see what we call an exceptional market environment in the first quarter where I think if nothing else, everybody was nervous and so I was having a tendency to postpone first things to right. Secondly, we went to a mass of sales re-organization in the US and Europe, which is our offset and see us on the topline. And third, we have a boarder range of new products and it looks placid in the market and we have a pretty good pipeline, pretty good line of sight if you will on the bookings, and we feel pretty good about where we are in the second quarter and beyond.

Greg is that bookings number that you are seeing, does that give you visibility for 30 days, or I am just wondering how the backlog pattern is in that business.

It's a fairly short time to frame, but I would say it is still around 60 days cycle.

Okay. Can you give some balance sheet data from Rob, if you have like the accounts receivable, the inventory, and the cash number?

The cash in the quarter was of course; slightly positive and I think if you recollect it there, Q1 is a difficult quarter for us from the cash flow standpoint. Because we pay a number of fairly large items that are accrued during the year, certain things like annual bonuses and sales commissions and such. So having said that we are pleased with our cash performance with the exception, I would say inventory is a little higher than we would have liked. Obviously, with the reduced sales, it will clearly have some higher inventory. But, we did offset with lower capital expenditure spending and plans in the quarter as we had been fairly judicious in our capital expenditure outflows, but as far as receivables at the end of the period came in about 350 million, inventory was 250, payables was 155, and our total working capital was about 444.

What was the capital expenditure numbers did you say?

The capital expenditure number was about 15 million.

Okay. Thank you.

We will take our next question from Farooq Farooqi with Merrill Lynch.

Hi, good morning, just some housekeeping items. Can we get the total debt and equity numbers at the end of the quarter please?

Debt was 814 million. The equity was 739. The total capital was 1553.

Thanks. Could you also please go over the FX impact by a segment, and also the internal growth by segment? So, basically, breaking out the FX and acquisition and divestitures.

Okay. Let me start with Life Sciences, the FX impact was about 3 million. The acquisition impact was in the case of, let us say, net NEA, and then we did have a slight divestiture last year of the product line we sold with the distributor. That is about 28 million. In optoelectronics, the foreign exchange impact was 1 million, and the divestiture impact, and this was the IT Center and Judgment business, was 3 million. In Fluid Sciences, it was an 800,000 benefit from the AFT acquisition, and FX was a sort of minimal. In instruments, the FX impact was 6.5 million and the impact of divestiture was about 10 million.

And finally, in the Life Sciences business, could you just give us some figures perhaps of what percentages of the sales for View lux and also the Victor, year-over-year on Victor?

Yeah. Farooq, we do not break out those product line sales. Obviously, they are competitively very sensitive. So, we do not break them out. I would say both and Victor V is doing very well with the introduction of fluorescent polarization and View lux, so both of those products are growing in a high speed.

Thank you very much.

We will take our next question from Paul Knight of Thomas Weisel Partners.

Hi! Greg. GE reported a good quarter with its medical business, particularly strong. What is going on there, are your shipments of your amorphous silicon screens still at capacity?

Let me talk a little bit about the Digital Imaging Business. We had a very strong quarter in digital imaging on the amorphous silicon side. Both shipments and the historical ray panel, which is the 41cm square large area ray panel. We are also in the process of introducing really for second half revenue, and then the cardiac panel, which is a smaller panel, 20 cm square panel, but a higher resolution, and then in the first quarter of next year, the ANGIO, which is a 41 cm high-resolution panel. So, that is the track we are on, and that continues very well. So, I think that part of the business was up. I think the more classic imaging business, which we frankly peeped into a lot of other instrument in life science companies, was down a bit. And so, we had very strong amorphous growth offset by some of the kind of classic instrument companies, which were down.

The European market has been viewed as pretty bullish, I think, starting the year, how is the European market right now on the instrument side?

I think on the instrument side, we had a strong quarter in Europe. On the Life Science market it was a little more mixed and may be it is because the Life Science market is really general more globally than the instrument market. The instrument market is a sort of more localized in Europe. So, I think that was really the distinction, but the Europe held out strong in the first quarter.

And lastly on the Volex side, what part of Volex is non-US?

I would say about 55%.

Okay. Thank you.

We will take our next question from Carissa Marino with Goldman Sachs.

Thank you. With regards to the Genomic Solution's announcement this morning, I was hoping that you could just discuss your thinking behind reducing your equity stake, and the option to purchase, and then also, if you could provide some color regarding their weakness in the areas where you distribute their products.

Well, let me just, sort of; summarize our view on what we are in Genomic Solutions. We had to enter arrangement originally with Genomic Solutions to provide distribution to the Genomic totally on these product lines. That has always been our interest. The equity was something that helped them through where they were in funding stages and in order to cash their value created we wanted to have some option with the call. It has been clear that the call option is, sort of, if you are hampering their growth in the marketplace, offsets their strategic flexibility in the marketplace. So, we have come to an arrangement that strength is our distribution agreement. So, we have extended it by another year to the end of 2002. We have also now taken over the UK exclusively where we did not have that before, in return, for giving up the call, and so, I think, under that basis we did reduce our equity commitment, but we still have 1.5 % of the company as a stake in the business, and I think our market confidence is that we are willing to extend and increase our distribution arrangement with them, which has been a kind of our interest in this. And I think we provided most leverage to them.

Great. Thanks. One other question, with regards to the telecom segment, given that this was a particularly strong area are you still on track for that 80-90 million revenue for the year?

Well, the telecom segment has been buffered by a very heavy wind, as you will know by everybody from CISCO, to Nortel , TDS to others. I think what has happened is that the revenue outlook has become a little more uncertain. When we supply the market, we see that the long haul has been pretty flat, and that the divisional and regional markets continue to grow. Also, the test equipment market continues to grow. We had a strong first quarter. I think we are building a little more, if you will, wider range in terms of our revenue outlook for the year. And so, we think, at this point, we will be up somewhere between 50-100%, in terms of revenue growth in market place, and so we have got to play it by year, quarter by quarters as the year develops. There is no question. This is clearly just a short-term phenomenon in the market place. There is no question about the strength of the long-term demand in the fiberoptic space, given the demand for bandwidth and broadband is out there.

Okay. Thanks. On that note, in terms of the long-term revenue growth estimate, is there any change in the thinking, kind of, once the macro economic condition passes, is there any reason why they should not take up to the levels that you were anticipating previously?

No. I mean, I think we go back and look at our strategy. It is too full. We already built world-class operations and continue to migrate our portfolios in the higher growth space. I think this quarter is a very good demonstration of world-class operation, and our ability to meet our commitments and our conviction about meeting our commitments, even though, the market environment changed very rapidly. In terms of migrating the portfolio, we continue to take those actions. So, when Rob talked about investments in R&D or the front-end sales, we talked about some of the alliances and acquisitions. We continue to boot strap up the organic and growth capability on the portfolio. I mean, I think, we are still on track, which way we are and that is to continue to have higher and higher organic growth every year as we go forward.

Great. Thanks a lot.

Welcome.

We will take our next question from Lake Goodman of Bridgett Capital.

Hi guys. A couple of questions. As far as you guys are giving guidance based on the revenue synergies from any end just as a, sort of, breakdown and look into the lifelines of this a little greater depth, and I am just wondering, are we still on target, for sort of 15-20 million in revenue synergies for the year as you guys drive the revenue opportunities out of any end?

Yes. I think we are been hit, say, we went through a fairly disrupted process in the first quarter, and we always knew it would be disruptive in terms of integrating the sales organization, perhaps really the right thing to do going forward. We feel very good about the overall integration of the two businesses at really every level. So, whether it is the sales, whether it is the customer reaction, whether it is the technology, whether it is production or material synergies, whatever aspect we feel good about, so we are still on track with those numbers in the revenue synergy.

And when we look at the high throughput screening business, I mean, there is one of your competitors, Molecular Base, who had a pretty well publicized shortfall. I guess, I am trying to better understand what the demand is like in the high throughput screening microplate reader business, and whether it is just some of these pieces of equipment that cost a bit more, and so on the one hand, may be some customers as you suggest, do the economic concern to you delaying purchases or on the other hand are we perhaps seeing a bit of saturation in the market place?

We don't see the saturation in the high throughput screening market place. I mean, there has been a lot of dialogue about the bottleneck in the drug discovery process. So, we are moving downstream into the difficult times. We do not disagree with that as far as to take a pinch point in the process. On the other hand, we see a still very robust demand, I mean, the whole mapping of the INVENTINO, everything that is going on in Photionics. I mean this really is an explosion of the information out there. And so, the requirement of the number of samples that you want to process is growing faster than we see the productivity coming in, the productivity, by the way which also drives the growth, because you need higher capability machines like the View lux Plus that can do a quarter million samples per hour. So, we see that it is both driving a need for more sophisticated equipment and instrumentation in there and more sophisticated reagents, which we although use in less quantities are higher value added reagents, and so there is some offset of that. So, as we stand back from these dynamics on high throughput screening, we see it continue to grow in the double digits.

Okay, and then my last question would be, you know Wall street seems to react pretty quickly to the said moves, and I guess, I am wondering you did mention that some of the customers experiencing the economic uncertainty may be delayed some purchase or becomes more cautious. How do you have visibility on when those customers become less cautious or when they will stop delaying purchases, and comeback into the volumes under this life science equipment?

In terms of a macro economic on that, I am not sure what to give you in reality. Indicator is out there kind of lagging indicators that you look at. We will see it is in the order book and whether things moved in the right or wrong. Taking the Life Science business, we feel good about sales in April. So, I mean there is a month right and things move around. So, I do not really have really a good, and I cannot give you a number to track. Let me state it, what we track is the pipeline on the product sales and the timing for those.

Well then, can I ask you as to when did those customers start to delay purchases or become more conservative? Is that months ago?

Yeah. The delay started was clearly alive in January and February, and in fact, we had a fairly strong March. But, it was alive in January and February in Life Sciences. We did not see much of it in December we saw in another businesses. We saw it in October, and I would say in the E&I businesses we saw back arrays as early as June, I mean, so there is a different cycle to these businesses. But, in Life Sciences, it was alive and well January 1st.

Okay, great. Thanks a lot.

Once again, to signal for question press * 1 and we do have a followup from Vivek Khanna of UBS Warburg.

Hi, Can you just talk a little bit about people in retention with any end on the sale force track and how successful have you been in retaining their sales or may be you did not want to......

y Summe: Take a look on any of the sales organization we have been very successful. We did force some turnover in the sales force, particularly in Europe. But, most of that came out of what I call a classic token of our Life Sciences, because, that is where the major change was, actually we did not think about any end it already had a European sales distribution structure in place. And what we had here was a country-specific structure. And, while I can give you some close accountability, it also puts a lot of structure in place, and we did not feel it is not responsive to a lot of our customers, which were much broader than a single country. So, as we went through the reorganization, the people who did not feel right or did not get into were principally out of the, I will it as a classic perky number of organization.

And then on divestiture, how are you doing with your target on divestiture?

We have three businesses. We are in the process of looking at the divestitures and I think they continue on track, so I expect this year to be some more in or around 100 million revenue kind of similar. That should distinct from what we did last year, and we will continue to faze that out.

And on the genetic screenings business, it looks like it has slowed down from, it was in the 20s last year, is that just a anniversary in the big contract in California or there is something else going on there?

Well, the genetic screening business does have some sick accounting to it. I think, also even within that you see a little bit of push-out on the instrumentation. It is a very heavy reagent sale obviously. But, it has got some sick accounting to it. So, we felt pretty good about where it was in the quarter.

When was View lux Plus introduced and could I add that View lux was introduced in 2001 and was so different about Plus versus View lux?

Well, the View lux Plus has the addition of two features. One is the _____00:42:15 polarization so, it was just introduced in later part of Q1 year. As _____ polarization has a minus 1000C camera. So, it includes the sensitivity and it has the polarization, which was important and actually the fact that View lux Plus was coming on, kind of hurt us a little bit in sales of the classic View lux.

Fine. Thanks. Okay, great. Thanks a lot, Greg.

Welcome.

Once again, if you like to ask a question, please press * 1 on your touchtone phone. And we do have a question from Scott Wilkins of SG Cowen.

Yes, just a further question on this sales deferral issue. Just wondering if you guys could maybe further segment the customers where you really saw more of the deferral in Pharma Biotech and then perhaps each depending on customers.

Well. I would say, for sure it is there in the Biotech, and that is very straightforward right with you when you close off the access to raise additional cash. And everybody gets a little more cautious about how they are spending the cash. So, I mean the Pharma should be driven by the capital markets and in the Pharma business particularly in Europe, we saw some cautiousness and part of that, you know, it is right for us to separate out how much of it is due to the consolidation and, kind of, sorting two issues on consolidation versus just hold things back a little bit on the capitals spending. In the academic and research, we did not see a lot of that. I mean, I think they continued to move along, although that is always the lowest growth market of the three.

Great. A couple of just on analytical instruments, your guidance for the year seems to be more or less in line with what was previously, could you maybe talk at bookings given the economic uncertainty there if you are saying delays on that side of the business?

We had very good bookings growth in Q1 of this year over Q1 of last year.

And then you mentioned strip in chromatography. I was just wondering if you could quantify that and what customer base you are seeing with strong acceptance in that product line?

The chromatography was up actually to low double digits I think in the quarter.

Where are you seeing the strong growth by end-user segment?

It is building on that Scott.

Okay. Thanks a lot guys.

Once again, * and 1 for question. Then we have another followup from Vivek Khanna at UBS Warburg.

Sorry to ask this one last question, but on the detection business, Greg can you, you know, really that was down 20% or so. What is your tolerance with that business given, you know, how quickly you do respond to weaknesses in your portfolio, I was just wondering?

The detection business was down. It was down fourth quarter as well. The issue there is in the automated advanced detection systems, which are principally driven by regulation, so those have moved to the right. There is a ....it was called an ECOG regulation driven by the common market in Europe, and that has been relaxed a little bit, and moved eventually to right. Conventional business was much more consistent from where it has been. So, we think there is a stronger underlying demand for these products, and we are working through some of the timing issues, I mean, the back half for this year, is much easier in comparison in the first two quarters of last year. They had very robust quarters on the automated detection systems, and the back half was already a sort of weaker in that area, in all of these businesses, we were doing in the business for the revenue size that it is.

Okay. Thanks.

At this time, there are no further questions. Mr. Summe, I would like to turn the call back over to you for any additional or closing remarks.

Thank you. You know, in summary, it was a quarter where our revenue growth was less than anticipated, but due to our ability to quickly implement contingency actions, we were more than able offset the less revenue. At the same time, we continue to make investment to fuel our future growth. So, we certainly have not done this, by backing off of our growth ambitions and that is where there is a strong and more effective front end, large and more capable R&D to organization, or acquisition alliances that brought our technology of product mix. Even on the divestiture side most of which are diluted to us we offset them in our operating results. I believe, the current environment is where Perkin Elmer will continue to differentiate itself as a company that has a management process, has the organizational depth, and a strategic staying power to deliver our next financial commitments, while continuing to increase the strength of our portfolio. I thank you for your time. This call is adjourned. Have a great day.

Thank you for your participation. This does conclude today's conference call. Thank you. You may now disconnect.