Updated from 9:09 a.m. EST

Merck ( MRK) said fourth quarter earnings met analysts' expectations and the big drug seller from New Jersey affirmed its profit targets for the full year.

Sales for the quarter rose even though the cholesterol drug Zocor continued to be clobbered by generic competition. Earnings were affected by higher marketing and administrative expenses associated with the rollout of new products, including three vaccines and the diabetes drug Januvia.

Excluding one-time items, Merck earned 50 cents a share for the quarter ended Dec. 31.Worldwide sales were $6.04 billion for the quarter, an increase of 5% from the fourth quarter of 2005 and easily ahead of expectations for $5.37 billion.

"These results clearly set the stage for our performance in 2007, as well as continued progress toward our long-term financial targets," said Richard T. Clark, the chairman and CEO.

When charges are included, Merck earned $473.9 million, or 22 cents a share, down 58% from a profit of $1.12 billion, or 51 cents, for the same period in 2005.

Charges in the most recent quarter included $466 million related to acquiring Sirna Therapeutics and $56 million for restructuring, including the cutting of 900 jobs. Merck says it's on schedule for reducing its payroll by 7,000 by the end of 2008. So far, 4,800 people have lost their jobs.

Merck said it should earn $2.51 to $2.59 a share, excluding items, in 2007. Analysts currently expect $2.61. However, when Merck provided the same forecast last month, Wall Street's consensus target was $2.55.

By midsession Tuesday, shares of Merck had declined 44 cents, or 1%, to $44.07.

Zocor lost U.S. patent protection in June, and fourth-quarter sales of $379 million represented a 65% plunge from the same period in 2005. For the year, Zocor sales were $2.8 billion, down from $4.38 billion in 2005. By year-end, sales will have shriveled to between $600 million and $900 million.

Helping offset Zocor's decline was the asthma treatment Singulair, whose sales rose 17% from the year-ago quarter to $960 million. The blood pressure drugs Cozaar and Hyzaar gained 11% to $865 million.

Total vaccine sales doubled to $683 million thanks to three new products -- one for preventing shingles, another to prevent the virus that can cause cervical cancer and a third for severe diarrhea.

Sales of Fosamax family of osteoporosis medications were flat at $789 as generic competition chipped away in several important markets. Merck took a $48 million charge in the fourth quarter to set up a reserve for defending Fosamax against claims that it caused a rare disease of the jaw.

Merck said 104 suits had been filed by year-end, although the company doesn't expect any trials to start until 2008.

Merck's cholesterol-drug joint venture with Schering-Plough ( SGP) produced total sales of $1.1 billion for the fourth quarter, up 46%. The joint venture markets Zetia from Schering-Plough as well as Vytorin, which combines Zetia and Zocor.

Additionally, the company added another $75 million in Vioxx legal reserves during the fourth quarter. The company withdrew the arthritis drug in September 2004 over concerns of increased cardiovascular risk.

The number of Vioxx-related lawsuits in the U.S. has grown to 27,400 claims of personal injuries plus 264 class-action suits. Merck says more than 4,025 claims have been dismissed, including 1,225 that can't be refiled.

The reserves cover the cost of defending the drug. Merck hasn't set aside any money for jury verdicts or settlements. Last year, Merck spent $500 million, including $175 million during the fourth quarter, on its Vioxx defense. The Vioxx reserve of $858 million by year-end represents the company's "best estimate" of legal costs through 2008, Merck said.

Judy Lewent, the chief financial officer, said the company has the "financial strength" to maintain the dividend at current levels. She said Merck entered into 50 licensing agreements and made three acquisitions last year. She added that Merck is talking to "over 40" companies about deals, adding that it continues to look for "targeted acquisitions."