Advanced Medical Optics Profit Slide

Shares fall.
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Advanced Medical Optics

(EYE) - Get Report

said fourth-quarter earnings fell 77.2% from the year-ago period, hurt by one-time expenses.

The company earned $2.3 million, or 3 cents a share, in the quarter, compared with $10.1 million, or 26 cents a share, a year ago. Adjusted for items, earnings were 37 cents a share in the quarter. On that basis, analysts surveyed by Thomson First Call were expecting earnings of 41 cents a share in the most recent quarter.

Fourth-quarter revenue rose 12.5% from a year ago to $252.8 million. Analysts were expecting revenue of $264.2 million in the quarter.

For fiscal 2006, the company expects to earn $2.20 a share to $2.30 a share on revenue of $1.02 billion to $1.04 billion; for fiscal 2007, the company expects to earn $2.65 or more a share on revenue of $1.10 billion to $1.12 billion. Analysts were forecasting earnings of $2.20 a share on revenue of $1.04 billion for 2006 and $2.64 a share on revenue of $1.1 billion for 2007.

Gross profit for the fourth quarter increased 10.5% to $144.9 million, compared with $131.1 million, a year ago. Gross profit margin declined 110 basis points to 57.2%, compared with 58.3%, a year ago. Operating income fell 95.8% to $1.0 million, compared with $23.9 million, a year ago, hit by a charge of $46.3 million due to product rationalization and repositioning initiatives.

While revenue from ophthalmic surgical sales for the fourth quarter rose 38.1% to $186.4 million, compared with $134.9 million, a year ago, revenue from eye care sales fell 26% to $66.3 million, compared with $89.6 million, a year ago.

"Implementation of our rationalization and repositioning strategy is on schedule," the company said. "We expect margin expansion in the second half of 2006, as our revenue mix shifts toward more value-added product sales, our productivity initiatives take hold, and we gain greater leverage of our global infrastructure."

The company's stock was trading at $41.98, down $1.62, or 3.7%.

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