Associated Press
WASHINGTON — Medtronic Inc., the world’s largest medical device maker, said Tuesday that legal expenses and declining foreign exchange rates weighed down its fiscal 2009 second-quarter profit.
Even excluding the legal fees, the Minneapolis-based company’s performance fell shy of Wall Street forecasts, in part due to lower-than-expected sales of pacemakers, spinal implants and other devices.
Company shares fell $4.82, or 13.2 percent, to close at $31.60. Earlier in the session, the stock hit $30.85, its lowest point since 1999.
Earnings for the period fell 14 percent to $571 million, or 51 cents per share, compared with $666 million, or 58 cents per share, a year earlier. Sales rose 14 percent to $3.57 billion from $3.12 billion.
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Eliminating $187 million in charges, mainly due to a patent dispute over stents with rival Johnson & Johnson, the company said it earned 67 cents per share.
Analyst expected 71 cents per share in profit, according to polling by Thomson Reuters. Such estimates generally exclude one-time costs and gains.
"Clearly, this was a tough quarter, and the environment is changed a bit," Chief Executive Bill Hawkins told analysts. "We have seen some things that we didn’t anticipate coming about in the last three months or six months."
Sales outside the U.S. rose 18 percent to $1.37 billion, helped by a $65 million boost from the weaker dollar. But that gain from currency exchange rates fell by more than half compared with $150 million in the last quarter.
Medtronic, its medical device peers and other sectors have benefited from a weaker U.S. dollar boosting the value of foreign sales. But the U.S. dollar has regained some strength, and Medtronic told investors Tuesday its full-year earnings and revenue could come in $400 million lower than expected as a result.
Medtronic now projects fiscal 2009 revenue of $14.6 billion to $15 billion, down from previous guidance of $15 billion to $15.5 billion.
The company also lowered the range of its earnings-per-sharologies of audience ratings services are best left to private industry groups such as the Media Rating Council."
Arbitron is already locked in legal battles over the Portable People Meter ratings system with the states of New Jersey and New York, which are seeking court orders to stop the rollout of the service.
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The company also faces other concerns among radio broadcasters about the quality of its data and methodology.
Separately Tuesday, radio station owner Cumulus Media Inc. said it will begin using audience measurement and radio ratings services provided by Nielsen Co. instead of Arbitron in 50 small to mid-sized markets beginning in the third quarter of 2009. Arbitron uses its diary system to track listenership in those markets, just as Nielsen is planning to do.
Among other things, the Nielsen service will rely on "large samples to reduce relative error and bounce," the companies said in a press release. Cumulus Chief Executive Lewd Dickey added that the company is making the switch after completing a search for a new measurement service "to improve the quality and value of radio ratings."
Clear Channel Radio will also subscribe to the Nielsen service in 17 of those markets.
Both companies subscribe to Arbitron’s Portable People Meter radio ratings service in larger markets. Clear Channel will have to negotiate for Arbitron’s diary ratings in smaller markets not covered by the Nielsen service.
Arbitron’ shares fell $2.48, or 10.3 percent, Tuesday.
