Accuray Incorporated (ARAY) reported disappointing results for the second quarter of fiscal 2010. Loss per share was 2 cents, higher than the Zacks Consensus Estimate of a loss per share of 1 cent. However, Accuray reported earnings per share of 2 cents in the year-ago quarter.
 
Sales
 
Total revenues in the quarter declined roughly 0.5% year over year to $57.3 million. Products revenues declined approximately 13.6% year over year to $35.7 million. Accuray bagged 18 orders for its CyberKnife Robotic Radiosurgery Systems and installed 11 new systems in the reported quarter.
 
Margins
 
Accuray witnessed a contraction in margins in the reported quarter. Gross margin declined 570 basis points (bps) year over year to 45.3%. Selling and marketing expenses as a percentage of sales declined 100 bps year over year to 17.6%. Research and development expenses as a percentage of sales declined 170 bps year over year to 13.6%. General and administrative expenses as a percentage of sales increased 210 bps year over year to 18.2%.
 
Lower gross margin primarily dragged down the operating and net margins that declined 510 bps and 440 bps year over year to -4.0% and -2.1%, respectively.
 
Balance Sheet
 
Accuray ended the quarter with cash, cash equivalents and short-term investments of roughly $114.0 million, an increase of 12.3% in the first six months of the fiscal year.
 
Outlook
 
Accuray expects total revenues in fiscal 2010 to range between $220 million and $230 million, compared to the previous guidance of $215 million to $230 million.
 
Headquartered in Sunnyvale, California, Accuray Incorporated designs, develops and sells the CyberKnife System, an image-guided robotic radiosurgery system used for the treatment of solid tumors. The CyberKnife System is the first and only commercially available intelligent robotic radiosurgery system designed to treat solid tumors anywhere in the body. This is promoted as an alternative to traditional surgery.
 
Presently, we have an “Underperform” recommendation on Accuray.
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