Updated from 5:21 p.m. EDT

Mylan Laboratories ( MYL) said Thursday that second-quarter earnings and sales fell below Wall Street's expectations, but the company affirmed its forecast for the full year.

That didn't stop investors from unloading the stock after the close. In extended trading, Mylan's shares fell at one point by 11% to $19.25. Later trading moved the price up to $20, but that was still down 7.5% from the 4 p.m. EDT close.

Excluding one-time items, the generic drugmaker reported earnings of 22 cents a share and sales of $298 million. Analysts polled by Thomson First Call were expecting a profit of 24 cents a share, excluding one-time items, on revenue of $317.1 million for the three months ended Sept. 30.

On a GAAP basis, Mylan earned $35.8 million, or 16 cents a share. For the same period last year, the company's GAAP-based profit was $48.7 million, or 18 cents a share, on revenue of $307 million.

Mylan reaffirmed its profit forecast of 92 cents to $1.15, excluding one-time items, for the fiscal year ending March 31. It also reaffirmed its EPS estimate for the following fiscal year of $1.20 to $1.74, excluding special items.

Second-quarter earnings were reduced by a 3-cent charge related to Mylan closing its brand-name drug unit and licensing an experimental blood pressure drug to another company. Another 3 cents represented the cost of restructuring.

Robert J. Coury, the vice chairman and chief executive, told analysts during a telephone conference call, that the current fiscal year remains full of "challenging conditions." Coury expects improvement during the next fiscal year.

The challenges he spoke of include greater competition and pricing pressures that caused Mylan's second-quarter sales to fall below the same period last year.

Coury said he expects to select by the end of the year a partner for marketing the experimental blood pressure drug nebivolol. Mylan originally wanted to develop and sell the drug itself. Until it finds a suitable ally, the company will continue to record extra R&D expenses for testing the drug.

He repeated comments about industry consolidation, saying mergers are both positive and necessary to reduce excess capacity in the generic drug industry. Mylan will be a buyer, looking only for deals that complement its existing product portfolio, he said.

The financial announcement preceded by one day Mylan's annual meeting at which nine directors will be up for election. The meeting's drama was diluted in July when the company made a massive buyback of shares , which included most of those held by corporate raider Carl C. Icahn.

Icahn began buying Mylan shares in July 2004 after the company announced its ill-fated bid to acquire King Pharmaceuticals ( KG) Icahn built up a 9.8% stake in Mylan. He opposed the King deal, which was called off in February. He also offered to buy the rest of Mylan's shares for $20 each, and he enlisted a slate of directors to challenge the company's nominees.

Icahn tendered all of his shares for the buyback, but because the offer was oversubscribed, Mylan could acquire only 94% of his stake -- the same percentage it bought from other stockholders. Whether Icahn sold his remaining shares isn't clear.

Though Icahn didn't formally withdraw his nominees, he didn't send out proxy solicitations promoting them, either. Mylan recently notified shareholders that Institutional Shareholder Services, a provider of proxy and corporate governance services, supports the company nominees.

During the second quarter, Mylan completed the buyback of nearly 51.3 million shares, or about 19% of its stock outstanding, for around $1 billion. After the buyback, Mylan repurchased 4.3 million shares on the open market for $78.4 million.

Mylan issued its financial results Thursday after markets had closed. In regular trading, the stock gained a penny, closing at $21.61.

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