earnings rose in the third quarter thanks to higher sales of its five biggest drugs. But the company missed analysts' estimates and said factors including the elimination of 4,400 jobs will leave full-year earnings well below forecasts.
On a continuing-operations basis that excludes the spun-off
unit, Whitehouse Station, N.J.-based Merck earned $1.87 billion, or 83 cents a share, on revenue of $5.76 billion in the latest third quarter. That compares with earnings of $1.77 billion and revenue of $5.43 billion last year.
Analysts had been forecasting earnings of 85 cents a share in Merck's latest quarter on revenue of $5.92 billion.
Merck said its five largest products -- Zocor, Fosamax, Cozaar, Singulair and Vioxx -- saw a collective sales increase of 9%, year-over-year. The company's third-quarter sales were boosted two percentage points by currency translations, with sales outside the U.S. accounting for 39% of the company's overall revenue.
Merck said it's cutting 3,200 full-time jobs and 1,200 contract and temporary employees and will take a charge of $140 million to $200 million to cover the costs in the fourth quarter. It expects to take additional charges of up to $125 million in 2004.
The workforce reductions, along with a new distribution program for U.S. wholesalers and "sales trends for its major in-line products" will result in full-year earnings of $2.90 to $2.95 a share, Merck said. Analysts surveyed by Thomson First Call were predicting earnings of $3.24 a share.
"In the aggregate, the major in-line products have not met the company's challenging revenue targets that it believed were achievable," Merck said in a release.
Merck's shares recently crossed at $46.82, down from the Tuesday close of $48.91.