Mentor Pulls Profit Forecast

Mentor (MNT) issued a third-quarter financial report that fell well below analysts' predictions for earnings and sales, and, citing strategic uncertainties, the company withdrew its profit guidance for the fiscal year ending March 31.

"The health of our business is strong and we are confident in the future," Joshua H. Levine, the president and CEO, said Monday. "Our third-quarter results were impacted by transitory factors and temporal disruptions."

Those factors included the Food and Drug Administration's continuing review of Mentor's silicone-gel breast implants for cosmetic purposes. In the U.S., these implants are only permitted in rare instances, such as reconstructive surgery for women who have undergone mastectomies. Many foreign markets allow the implants for cosmetic purposes.

Mentor, based in Santa Barbara, Calif., also is seeking to expand its aesthetics-medicine business -- such as dermatology products -- and to find a "strategic alternative" for its urological-products unit. Levine said a decision should made in 90 days.

"While we strongly believe these activities have the potential to create significant value for Mentor's shareholders, there is uncertainty regarding their timing, said Levine. "Because of a lack of visibility in these areas, we believe it is appropriate to withdraw our full-year financial guidance for fiscal year 2006."

The company had forecast earnings of $1.60 to $1.65 for the fiscal year, excluding the potential impact of silicone-gel implants and a decision on its urological products. The Wall Street consensus had been $1.56.

The earnings and revenue news, delivered after the markets had closed, sent Mentor's stock sinking in extended trading. Lately the shares were down $3.27, or 7.5%, to $40.63. In regular trading, the stock slipped 19 cents.

For the three months ended Dec. 31, Mentor posted earnings of 33 cents a share, excluding one-time items, on revenue of $120.5 million. Analysts polled by Thomson First Call had forecast a profit of 38 cents a share, excluding items, and revenue of $130.6 million.