Reinvention Time for Pfizer

Updated from 10:11 a.m.

Pfizer (PFE) CEO Henry McKinnell said Tuesday that although 2005 will be a transition year, he expects the drug giant to return to double-digit earnings growth starting in 2006.

"We have reinvented ourselves many times, and it's clearly time to do it again," McKinnell said during a meeting with analysts and investors.

The company offered guidance for 2005 that was lower than analysts had expected. Pfizer said it expects to earn $2.00 a share, excluding items, down from $2.12 a year ago. On a GAAP basis, the drug giant expects net income of about $8.6 billion and EPS of about $1.16.

Analysts expect earnings per share of $2.13 and revenue of $51.81 billion for the year, according to the consensus among analysts polled by Thomson First Call.

For the first quarter, Pfizer forecast adjusted EPS of about 53 cents -- or 13 cents on a GAAP basis. The First Call consensus is EPS of 52 cents and revenue of $12.44 billion, although Pfizer won't issue first-quarter results for another three weeks or so.

Despite the problems, McKinnell added: "We expect our performance to rebound quickly in 2006 and accelerate in 2007."

Part of Pfizer's future progress will be based on cutting costs. The company is targeting $4 billion in total annualized cost savings by 2008, which represents about 12% of Pfizer's current cost base. Those cost savings exclude the savings the company continues to wring out from its 2003 acquisition of Pharmacia.

Pfizer declined to quantify how many employees might lose their jobs during its corporate streamlining, adding that there would be "some modest reduction" in total employment. Pfizer has 115,000 employees worldwide. The company added that any cuts in its 38,000-member sales staff would be achieved through attrition.