Updated from 10:36 a.m. EDT
The bad news kept mounting for
Before the market opened Tuesday, the company issued a tepid earnings forecast and said it would lay off up to 1,800 workers. Then, in a letter to physicians, the company cautioned that as many as 37,000 of its Kappa and Sigma pacemakers may be defective, the Associated Press reported.
The company said the problem pacemakers -- which either don't respond or run out of battery power -- may have played a role in two deaths.
Earlier in the day, Medtronic pegged its earnings per share for the fiscal year 2010 at $3.10 to $3.20. Analysts polled by Thomson Financial had been looking for EPS of $3.21. The company also forecast revenue growth of 5% to 8% for the year, excluding any possible impact from currency fluctuations. Additional sales from a number of acquisitions will account for much of that growth.
In an effort to cut costs, the company said it planned to eliminate between 1,500 and 1,800 jobs -- including 400 in the U.S. who've already accepted buyouts -- and take another restructuring charge in the upcoming first quarter to pay out severance. It didn't say how much the charge would amount to, or how much it expected the moves to save.
Also before the market opened Tuesday, Medtronic reported quarterly earnings that equaled Wall Street estimates, despite a series of charges and items that caused profit to fall 69% year-over-year.
In the main, those charges derived from the acquisition of three heart-device makers -- and intellectual property from a fourth -- for a total of $530 million. The Minneapolis medical-devices giant also spent $188 million to settle a lawsuit with Johnson & Johnson, which had sued Medtronic over its use of patents, and $27 million in restructuring costs, including job cuts. All that translates to a bottom line of $250 million, or 22 cents a share, for the fiscal fourth quarter ending in April. A year ago, the company made $812 million, or 72 cents a share.
Excluding that list of items, the company said it had net earnings of $916 million in the fourth quarter, or 82 cents a share, up 4% from the year-ago period.
Revenue fell 1% to $3.83 billion, a decline the company blamed on a weaker dollar. The company's top line would have been higher by $100 million without those bad exchange rates, it said.
The company's shares closed Tuesday down 6.5%, or $2.20, at $31.76, on volume of 25 million shares. Average daily turnover is 8.8 million.
Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.