PharmaNet Shares Get Hammered

For its part, however, PharmaNet tried to look on the bright side.

"While earnings were adversely impacted by higher-than-expected cancellations, which occurred in the fourth quarter of 2007 and again in the first quarter of 2008, we are encouraged by the significant new business wins allowing us to build our backlog," PharmaNet CEO Jeffrey McMullen stated on Thursday. Moreover, "it is important to note that the cancellations are not the result of our performance but are instead related to clients' decisions about the product under study.

"We believe the higher backlog clearly indicates that we continue to be competitive in the fundamentally strong market for outsourced (contract research organization) services and enjoy our clients' confidence in our abilities."

Nevertheless, PharmaNet still had to slash its 2008 guidance by almost two-thirds. The company now expects to earn just 53 cents to 63 cents a share over the course of the entire year. Before Thursday's devastating update, analysts had been looking for the company to generate a full-year profit of $1.52 a share instead.

'Unacceptable' practices

Smith & Nephew weathered some first-quarter setbacks, too.

The London-based orthopedics device maker also missed Wall Street expectations for the latest period. The company blamed "unacceptable" sales practices at recently acquired Plus for part of its problems.

"We have undertaken a thorough investigation, which has progressed a long way but is not yet complete," Smith & Nephew stated on Thursday. "We have immediately moved to harmonize these practices with Smith & Nephew's standards."