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You Are Here: Home > Articles > Commentary > Bookkeeping: Closing Ilumina (ILMN) on Warning;...

Bookkeeping: Closing Ilumina (ILMN) on Warning; Will Revisit Later in the Year
Jul 02, 2009

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Trader Mark

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I only have about a 0.4% stake in Illumina (ILMN) so I am going to take about a 8% loss on this last batch (stock is down about 10%) today on the earnings warning. The stock had just been flopping around listlessly so it was not a major position for us, thankfully.
A large gap has been created which is going to take time to work through and time is money. It's not exactly a "value buyers" dream down here either as it is still rich.... valuations like this are based on continued excellence in executation and ILMN's armor has been penetrated from that angle. The stock is down a lot less than in afterhours yesterday unlike Myriad Genetics (MYGN) which was obliterated yesterday and down far worse than the after hours - so there is promise there.

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From a portfolio perspective I don't have confidence to add to the position here with the chart set up, and I can't rely on valuation either so I'd rather just exit and come back later in the year when things are more clear. All they've really done is gone back to guidance at the beginning of the year, rather than that given more recently - but either way, the damage is being done to the stock.
There is some language in their warning about disappointing funding from Obama's stimulus but if they were counting on that in their estimates I blame management.... I take a lot more serious the drop off in foundation spending since this is a big source of purchase for their products.


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