Watson Pharmaceuticals Misses

Revenue and profits are short of estimates.
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Wall Street was disappointed with

Watson Pharmaceuticals

(WPI)

Tuesday after the drugmaker fell short of analysts' estimates for both sales and earnings in the third quarter.

Watson, Corona, Calif., earned $34.4 million, or 31 cents a share, on revenue of $440.5 million for the three months ended Sept. 30. Analysts polled by Thomson First Call had predicted earnings of 34 cents and sales of $478.5 million.

For the year-ago quarter, Watson earned $39.1 million, or 35 cents a share, on revenue of $410.3 million.

The results exclude contributions from the generic-drug company

Andrx

, whose $1.9 billion purchase was completed on Monday. Citing the timing of the Andrx deal and "numerous adjustments anticipated following the close of the transaction," Watson won't make a full-year forecast for the combined companies.

"The addition of Andrx is one of several key strategic initiatives we have undertaken to enhance long-term revenue growth, reduce costs and achieve operating efficiencies," said Allen Chao, the chairman and CEO of Watson.

Excluding sales from new-product launches and the Andrx impact, Watson expects fourth-quarter operating results will be "similar" to those of the third quarter. The consensus is for a profit of 40 cents on sales of $470.2 million.

Most of Watson's revenue comes from generic drugs. During the third quarter, generic sales accounted for $347.6 million of the total, up 10% from the year-ago quarter. Sales of brand-name products fell 7% to $85.6 million.

Watson's results were announced after markets had closed. In regular trading, Watson lost 9 cents to close at $26.25. Following the report, the stock lost 62 cents.