St. Jude Tops Forecasts

Updated from 8:54 a.m. EDT

St. Jude Medical(STJ Quote) posted lower third-quarter earnings amid charges and a drop in implantable defibrillator sales, but the results surpassed expectations.

The medical-device maker earned $116 million, or 32 cents a share, compared with $168 million, or 44 cents a share, in the year-ago quarter.

St. Jude took a charge of $35 million, or 6 cents a share, related to the combination of its cardiac surgery and cardiology divisions and changes in its sales and customer-service operations. The company also recorded a charge of 3 cents a share on stock-based compensation.

Excluding charges, St. Jude earned 41 cents a share. Analysts surveyed by Thomson First Call expected earnings of 37 cents a share.

The St. Paul, Minn., company reported sales of $821 million, up 11% from $738 million a year earlier. The results beat analysts' target for sales of $819.2 million. Shares fell 1.2% to $36.82.

Implantable cardioverter defibrillator sales fell for the second quarter in a row, down 2% to $271 million, while pacemaker sales rose 7% to $248 million.

Though the overall U.S. ICD market has been suffering since last year's wide recalls of Guidant devices, St. Jude expects the market to stabilize and eventually grow. Boston Scientific(BSX Quote) bought Guidant earlier this year.

Based on St. Jude's estimates, the global ICD market has decreased 4% to 6% from a year ago, but the weakness has been based in the U.S. Sales of the devices elsewhere were up 29%.

Defibrillators were initially guilty of cannibalizing the sales of St. Jude's pacemakers when they were first introduced, but sales of the older devices have been improving, said Daniel Starks, St. Jude's chairman, president and CEO.