Zimmer Holdings ( ZMH) said second-quarter sales were up nearly 80% from year-ago levels, thanks in part to a pair of acquisitions, but shares fell after the company's new sales guidance failed to pass current analyst expectations.

Zimmer announced second-quarter net earnings of $116.3 million, or 47 cents a share, up from $89 million, or 45 cents a share, in the year-ago quarter. On an adjusted basis, which is how Wall Street views the company, Zimmer earned 58 cents a share, topping the 55-cent estimate and the company's earlier guidance.

On a reported basis, net sales came in at $737 million, beating the $733.1 million Wall Street estimate, up 79% from the $411.1 million it saw a year ago, driven by Zimmer's acquisitions of Centerpulse and Implex. The company announced that sales in its reconstructive and knees product categories rose more than 50% year-over-year.

Going forward, Zimmer said 2004 revenue would come in between $2.94 billion and $2.965 billion, up $15 million from its earlier guidance, but slightly less than the current analyst estimate of $2.968 billion. Adjusted earnings are expected to range between $2.26 and $2.30 a share for fiscal 2004, up 6 cents from its previous guidance and higher than current consensus of $2.25 a share.

Before the company released earnings late Wednesday, Zimmer shares ended down $2.80, or 3.7%, to $73.75, sideswiped by a selloff in the sector sparked by J.P. Morgan analyst Michael Weinstein's downgrade of rival Wright Medical Group ( WMGI) to neutral, saying that shares were overvalued. With Stryker ( SYK), another orthopedics-related company, announcing weaker sales of hip replacements in the second quarter, investors are growing skittish of the once-hot sector.

But with Zimmer's new sales guidance falling below current consensus, shares of the company continued to slide after hours, falling another $4.74, or 6.4%, to $69.01.

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