Merck Guides in Line

Merck ( MRK) Thursday forecast first-quarter earnings in line with analysts' estimates, as it strives for a reversal of fortune in 2004.

The nation's No. 2 drugmaker said it expects to earn 71 cents to 73 cents per share in the first quarter. Merck also reaffirmed full-year 2004 guidance of $3.11 to $3.17 a share. The consensus estimates are 72 cents and $3.13 a share, respectively, according to Thomson One Analytics. Merck earned 76 cents a share in the first quarter of 2003.

The New Jersey-based drugmaker said first-quarter guidance does not include costs associated with its acquisition of Aton Pharma, or a gain from the sale of an equity stake in its European nonprescription pharmaceuticals joint venture to its partner Johnson & Johnson ( JNJ), both of which are likely to close during the period. Merck said the combined effect on earnings will be neutral for both the quarter and the full year.

In the fourth quarter, Merck earned $1.39 billion, or 62 cents a share, from continuing operations, compared with $1.81 billion, or 80 cents a share, a year ago. Revenue fell to $5.6 billion from $6.1 billion last year.

In October 2003, Merck said it would cut 4,400 positions. In January of this year, the company said it expected additional restructuring costs in 2004 of approximately $75 million to $125 million. Merck said the measures are expected to generate annual savings of $250 million to $300 million starting in 2005.

Merck shares rose 49 cents, or 1%, to $47.60 in premarket trading, well off their 52-week high of $63.50.

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