Watson Pharmaceuticals

(WPI)

said fourth-quarter profits fell from a year ago, but the company beat analysts' expectations, as internal research and development, strategic alliances and acquisitions helped drive the bottom line.

The pharmaceuticals maker and developer said income for the quarter, excluding items, fell to $32.4 million, or 31 cents a share, from $43.8 million, or 44 cents a share, in the prior-year period. Analysts expected the company to earn 27 cents in the latest quarter, according to

First Call/Thomson Financial

.

For the fourth quarter ended Dec. 31, revenue rose 32% to $255 million from $193 million in the same quarter a year ago.

For the first quarter, Watson, which is based in Corona, Calif., expects revenue of $270 million to $290 million. Excluding nonrecurring items, the company expects income of 39 cents to 41 cents a share. For fiscal 2001, Watson forecast revenue of $1.2 billion and income, excluding items, of $2.21 to $2.23 a share.

Analysts expect the company to earn 41 cents in the first quarter and $2.22 for the year. Watson earned 41 cents in the first quarter of 2000 and $1.12 for the year.

Shares of Watson fell $2.35, or 4.3%, to $52.43 in recent

New York Stock Exchange

composite trading.