Flat Quarter for Merck

Merck's ( MRK) second-quarter earnings were essentially the same as they were a year ago, matching Wall Street expectations, while the company also issued guidance that was in-line with current expectations.

Merck announced second-quarter net income of $1.77 billion, or 79 cents a share, which was in-line with Wall Street estimates, but slightly less than the $1.78 billion, or 79 cents a share, it had a year ago.

While earnings were flat and inline with expectations, worldwide sales grew by 9% in the second quarter, coming in at $6 billion. But the growth is not as strong when the effect of currency and a year-ago charge are factored in. Excluding currency effects, the company said sales would have grown by 6% against last year's quarter, which was impacted by a $405 million charge after the company bought out a wholesaler.

Sales growth of Merck's major drugs were strong, but offset by lower revenue from the company's relationship with AstraZeneca ( AZN) and also generic and over-the-counter competition.

The company's blockbuster cholesterol fighter, Zocor, racked up $1.4 billion in sales during the second quarter, up 3% year-over-year, while sales of Fosamax, Merck's osteoporosis treatment, came in at $792 million, essentially flat with last year. Sales of Singulair, a chronic asthma drug, were especially strong, coming in at $643 million, up 21% annually.

Going forward, the company said it expects third-quarter earnings to come in between 80 and 84 cents a share, basically in-line with current Wall Street consensus of 82 cents a share. For the full fiscal year, the company expects to earn between $3.11 and $3.17 a share, against the consensus analyst estimate of $3.14 a share.

The company said it was also on track to eliminate 4,400 jobs worldwide by the end of 2004 as part of a cost-cutting plan. Merck has already laid off 4,000 people as of June 30 and expects restructuring costs to come in between $60 million and $80 million.

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