Shares of

King Pharmaceuticals

(KG)

jumped Tuesday after the company said lower expenses and reduced inventories would produce higher-than-predicted first-quarter earnings.

King had previously suggested that first-quarter earnings would be 14 cents a share, excluding one-time items, matching the consensus view among analysts polled by Thomson First Call. On Tuesday, King said first-quarter EPS would be about 28 cents. First-quarter results will be released May 9.

The news sent King's stock up 51 cents, or 6.3%, to $8.58. Despite the gain, King's stock is still off about 50% over the past 12 months.

"The completing of wholesale inventory reductions of our key products represents an important milestone for King," said James R. Lattanzi, the chief financial officer, in a prepared statement.

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Swollen inventories played a major role in King's

recent financial problems, including the company's restatement of earnings for several years. The restatement also contributed to the collapse of the proposed acquisition of King by

Mylan Laboratories

(MYL) - Get Report

.

Inventories for some of King's biggest products were nearly cut in half between Dec. 31 and March 31. "With our wholesale inventory management issues now resolved we look forward to providing more transparent and predictable financial results going forward," said Lattanzi, 52, who will retire June 1.

The reduced inventories should translate into a decrease in reserves for product returns and rebates, as well as an increase in net sales, the company said.