Updated from 8:10 a.m. EDTBristol-Myers Squibb ( BMY) reported a sharply lower second-quarter profit as it increased reserves for liabilities but offered mixed guidance for the years ahead, triggering a sharp decline in its stock price. The New Jersey-based drugmaker had net earnings of $527 million, or 27 cents a share, vs. $902 million, or 46 cents, in the year-ago period. Items included an increase in legal reserves for liabilities of $455 million and acquisition-related costs. Excluding items, the company earned 46 cents a share, vs. 45 cents a year ago. The consensus estimate was for 39 cents a share, according to Thomson First Call. Worldwide revenue increased 6% to $5.4 billion. International net sales increased 10%, including an 8% favorable foreign exchange impact. "In our pharmaceutical business, we continue to make good progress executing our strategy and transitioning our portfolio to become more focused on disease areas where the need for better treatments is great, and where we have promising pipeline or licensing opportunities to build leadership positions. To that end, we are investing significantly behind our growth drivers and late-stage pipeline." The company said, adding R&D spending increased 19% in the quarter. During the quarter, sales of Plavix increased 38% to $769 million, while sales of Avapro/Avalide, a hypertension drug, increased 37% to $233 million. Sales of the cancer drug Erbitux, which the company is co-marketing with ImClone ( IMCL) hit $72 million. The drug was approved by U.S. regulators in February of this year. The company also raised full-year guidance by 10 cents to $1.60 to $1.65 a share on an adjusted non-GAAP basis. Including items, the EPS range is $1.43 to $1.48, which is 5 cents lower than previously estimated. The consensus estimate is $1.52. Bristol-Myers also said its forecasts for 2005 and 2006 will be "somewhat below the current Thomson First Call consensus estimates for those years." They are $1.49 for 2005 and $1.46 for 2006. Shares fell $1.27, or 5.4%, to $22.30, a new 52-week low, in heavy trading. Bristol-Myers Squibb is the last major U.S. drugmaker to report earnings. In sum, second-quarter results in the sector have been mixed. Industry No. 1 Pfizer beat analysts forecasts by a penny Wednesday, as its stable of drugs posted broad-based gains. Merck ( MRK ) met expectations, while profit and revenue slipped a bit. Schering-Plough fell short of expectations in posting a tiny loss. Wyeth ( WYE ) surpassed forecasts as revenue rose 13%. Eli Lilly ( LLY ) reported double-digit sales growth for the sixth straight while meeting expectations but guided lower for the third quarter. Switzerland-based Novartis ( NVS ) easily beat consensus estimates as net income rose 19%.