The share price of St. Jude Medical fell as much as 15 percent today after the company said sales won't live up to expectations.
The Little Canada-based medical device manufacturer says sales will be up about seven percent over last year's third quarter. But the company had expected up to a 13 percent sales increase.
The company expects per-share earnings will be about five percent less than it previously forecast, dropping to 57 to 58 cents per share.
The company said it believes sales won't meet expectations partly because hospitals are keeping fewer advanced medical devices in their inventories. St. Jude expects the sour economy and uncertainty about health care reform are behind the inventory cutbacks. That has Wall Street wondering if other medical device manufacturers may also miss sales and earnings projections.
St. Jude is also cutting jobs. The company said it will have about $50 million in severance charges in the third quarter. Since August, St. Jude has announced the termination of some 450 employees, including about 40 Minnesota employees who got pink slips last week.
Worldwide, St. Jude employs 15,000 people.