Medtronic 4Q profit drops on job-cutting expenses

Medtronic, the world's largest medical device maker, said Tuesday its fourth-quarter net income dropped 19 percent on expenses related to its recent layoffs.

The Minneapolis company's quarterly profit fell short of Wall Street estimates, as did its outlook for new fiscal year. Its shares lost 41.16, or 2.8 percent, to $40.10 in premarket trading.

Medtronic said it earned $776 million, or 72 cents per share, in the fourth quarter. That was down from $954 million, or 86 cents per share, a year ago. Excluding $198 million in charges relayed to employee terminations, asset write-downs, and other costs, the company earned 90 cents per share.

Sales rose 2 percent to $4.3 billion from $4.2 billion.

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Analysts polled by FactSet expected earnings of 93 cents per share for the quarter on sales of $4.29 billion, on average.

Medtronic has struggled to maintain earnings growth amid sluggish sales of its two leading products: heart defibrillators and spinal implants. In February the company announced 2,000 layoffs to bolster its financial position.

It forecast revenue growth of 1 to 3 percent for the next fiscal year ending in April, which implies a total of $16.1 billion to $16.41 billion. The company expects to earn $3.43 to $3.50 per share. That includes 4 to 6 cents per share in costs related to its acquisition of blood pressure treatment maker Ardian.

Analysts expect a profit of $3.62 per share and $16.7 billion in revenue.

For the fourth quarter, sales of implantable heart rhythm products fell 7 percent to $1.32 billion on lower sales of devices that are used to treat rapid heartbeats. Sales of those products, called implantable cardioverter defibrillators, fell 16 percent to $760 million as U.S. sales continued to slump. Sales of cardiovascular devices grew 16 percent to $879 million.

The company's spinal revenue fell 1 percent to $875 million. However, sales of diabetes treatments, surgical technology, and neuromodulation devices, which to treat pain and other conditions by stimulating the nervous system, all improved.

Medtronic said its international sales rose 12 percent on better sales in emerging markets like China, Latin America, India, and the Middle East and Africa.

Earlier this month the company announced it had selected Omar Ishrak, former the head of General Electric's Healthcare unit, to serve as its new chairman and CEO. The company search for a new chief executive for about six months after announcing in December that Chairman and CEO Bill Hawkins planned to retire.

Medtronic's annual profit was nearly unchanged at $3.1 billion in the year ended April 29. A lower share count meant Medtronic earned $2.86 per share, up from $2.79 per share. Revenue edged up 1 percent to $15.93 billion from $15.82 billion.

Medtronic acquired Ardian in January for $800 million. The company makes a catheter system that is designed to treat high blood pressure by deactivating nerves around the kidneys, a therapy called renal denervation. Its Symplicity Catheter System has been approved in Australia and Europe, but is not yet cleared for sale in the U.S.

(Copyright 2011 by The Associated Press. All Rights Reserved.)