Pfizer Posts Loss on Pharmacia Charges - TheStreet

Pfizer Posts Loss on Pharmacia Charges

The company says revenue rose 37%. Pfizer also maintains its outlook for the full year.
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Updated from 7:56 a.m.

Pfizer

(PFE) - Get Report

said Friday that it lost $3.59 billion for the second quarter; but knock out those Pharmacia acquisition costs and Pfizer actually beat analysts' earnings-per-share estimates for the three months ended June 30.

New York-based Pfizer reported what it calls adjusted income of $2.37 billion, or 30 cents a share, for the second quarter -- one penny better than the consensus estimates of 28 analysts polled by Thomson First Call. The adjusted income for the second quarter of 2002 was $2.09 billion, or 33 cents a share.

Remove those adjustments -- merger costs and charges amounting to $5.42 billion -- and the company produced a net loss of $3.59 billion, or 48 cents a share, compared with a profit of $1.96 billion, or 31 cents a share, for the same period last year.

Revenue rose 37% to $9.99 billion from $7.30 billion during the second quarter last year, but that gain was distorted by the addition of Pharmacia products. The Pharmacia deal closed on April 16.

After sifting through all of the changes, investors bid up Pfizer's shares Friday and the stock closed at $33.04, up 49 cents, or 1.5%.

David Shedlarz, executive vice president and chief financial officer, reaffirmed the company's EPS guidance of a merger-adjusted $1.73 for 2003 and a merger-adjusted $2.13 in 2004. He said the combined Pfizer-Pharmacia should reach $54 million in total revenue in 2004, representing a 10% compound annual growth from the $45 billion in pro forma sales last year.

Having swallowed Pharmacia and still digesting the Warner-Lambert acquisition of June 2000, Pfizer can be expected to continue looking for ways to cut costs, products or divisions.

On Thursday, the company said it was "exploring strategic options" for its surgical ophthalmology business, which it inherited from Pharmacia and which had sales of about $150 million last year. Earlier in the month, Pfizer said it used the same terminology to discuss another Pharmacia unit, a diagnostic products business with annual sales of $220 million.

One holdover from Warner-Lambert -- the Adams confectionery business -- was sold in March for $4.2 billion to

Cadbury Schweppes

. Another Warner-Lambert staple -- the Schick-Wilkinson Sword shaving products business -- also was sold in March for $930 million to

Energizer Holdings

. And in another March transaction, Pfizer sold several oral contraceptive and hormone replacement drugs -- also part of the Warner-Lambert portfolio -- for $359 million to

Galen Holdings

. Pfizer could receive up to $125 million in residual payments depending on the drugs' success.

Pfizer said Friday that it achieved $200 million in cost savings during the second quarter from the Pharmacia acquisition. It anticipates a cumulative benefit -- the company calls it "cost synergies -- of $1 billion this year, $3 billion next year and nearly $4 billion in 2005, "significantly more than originally estimated."