Carl Icahn calls Illumina’s Q1 results “very disappointing,” sharply lowers plan

Carl Icahn called on Friday Illuminina the first quarter the results “very disappointing” and criticized the DNA sequencing company new plans reduce costs.

The activist investor, who owns a 1.4 percent stake in Illumina, is va heated proxy fight with the company regarding its acquisition of cancer test developer Grail in 2021.

Icahn and Illumina were strike trading more than a month.

Icahn is pushing for seats on Illumina’s board and is pushing for the company to end its purchase of Grail. It also calls on the San Diego-based company to oust CEO Francis deSouza “immediately.”

Illumina on Tuesday reported quarterly revenue and profits that beat Wall Street expectations.

But the company also posted net income of $3 million in the quarter, down more than 96% from the $86 million it collected in the same period a year ago.

In an open letter to Illumina shareholders on Friday, Icahn accused deSouza about the “desperate, ridiculous and above all unsuccessful” attempt to report “resolutely mediocre” quarterly results during the press tour this week.

Icashn pointed at deSouza an interview on CNBC”Squawk Box” on Wednesday, in which the CEO highlighted strong demand for Illumina’s diagnostic testing services.

“Illumina CEO Francis deSouza believes he can fool all the people all the time,” Icahn wrote.

He added that “those not adept at deciphering doublespeak might actually get the impression that Illumina did well!”

Icahn also said that Illumina’s share price fell by as much as its CEO this week “clearly signals dissatisfaction with the earnings report and dissatisfaction with Mr. deSouza’s transparent attempt to put lipstick on a pig.”

Illumina’s stock has fallen more than 9% since the company posted earnings. Shares were mostly flat on Friday after Icahn released his letter.

In that message, Icahn also discussed the cost-cutting plans Illumina has unveiled to improve its declining margins. He called these measures “vague” and “extremely unambitious”.

The company said Tuesday it will enable unnamed “activities” in more cost-effective areas of the world and will use its new NovaSeq X sequencing system among other things to accelerate genomic discoveries.

Those plans will help Illumina achieve adjusted operating margin goals of 24% in 2024 and 27% in 2025, the company said in an earnings release.

Icahn called those target margins “less than modest.” And he argued that “it will take years to come to fruition, if at all.”

The company projected an operating margin of 22 percent for 2023, down from the 23.8 percent reported in 2022.

Ilumina reported a negative operating margin of 5.7% for the quarter, down from 15% in the same period a year ago. The company’s gross margin during the period fell to 60.3%, down from 66.6% in the first quarter of 2022.

Ilumina did not immediately respond to a request for comment on Icahn’s letter.

So does the FTC ordered Illumina should abandon the acquisition due to these concerns.

The European Commission, the European Union’s executive body, also blocked the deal last year over similar concerns.

Ilumina is appealing both orders and expects final decisions in late 2023 or early 2024.

Last week, the US Federal Court of Appeals said that will quickly follow a review of Illumina’s challenge to the FTC order.

Icahn’s resistance to the takeover stems from Illumina’s decision to close the deal without obtaining approval from those antitrust regulators.

It is strong at the beginning of this month criticized Illumina and its management to complete a “reckless deal” that they call “a new low for corporate governance.”

Ilumina urged shareholders to reject Icahn’s three board nominees annual general meeting of shareholders expected on May 25.