Updated from 8:37 a.m. EST

Bristol-Myers Squibb ( BMY) said Thursday that fourth-quarter sales dropped 16% as generic competition smacked the anticoagulant Plavix and the cholesterol drug Pravachol.

However, earnings per share of 19 cents beat Wall Street's estimates by 3 cents when one-time items were excluded. By early afternoon, shares were off 54 cents, or 2%, to $26.44.

Once all items were counted, the company lost $134 million, or 7 cents a share, for the three months ended Dec. 31, reversing a profit of $499 million, or 26 cents a share, for the same period in 2005.

The loss was caused primarily by two charges. One was a $220 million charge for early debt retirement, and the other was a $353 million expense for increasing a litigation reserve for a tentative settlement with the Justice Department over past drug pricing and marketing practices.

Bristol-Myers predicted 2007's earnings would be in a range of $1.20 to $1.30 excluding items. Analysts polled by Thomson First Call have projected $1.22 a share for what interim CEO James Cornelius called "a transitional year."

Cornelius replaced Peter Dolan, who was ousted in September . Cornelius told analysts and investors that the board was moving with "all deliberate speed" to hire a permanent CEO, but he offered no timetable.

Fourth-quarter sales fell to $4.2 billion from $5 billion for the year-ago period. Sales of Pravachol plunged 75% to $146 million thanks to the U.S. patent expiration in April. U.S. sales of the drug sank 86% to $50 million.

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