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Profit drops 19 percent at Medtronic

Associated Press / May 25, 2011

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Medtronic said yesterday its profit dropped 19 percent in the fourth-quarter and the device maker predicted lower-than-expected growth for the year ahead due to a continuing slump in sales of its implants.

The Minneapolis company’s quarterly profit fell short of Wall Street estimates, as did its outlook for the new fiscal year.

Medtronic, the world’s largest medical device maker, has struggled to maintain earnings growth amid sluggish sales of its heart defibrillators and spinal implants. In February the company announced 2,000 layoffs to bolster its financial position.

Analysts hoped the restructuring and improving market trends would result in higher earnings expectations, but company management said sales would continue to be pressured by headwinds. In particular, its heart-pacing defibrillators have been hurt by a medical paper suggesting the devices are overused and a federal investigation into doctors who implant the devices.

Medtronic said it earned $776 million, or 72 cents per share, last quarter. That was down from $954 million, or 86 cents per share, a year ago. Excluding some items the company earned 90 cents per share.

Analysts polled by FactSet expected earnings of 93 cents per share for the quarter.

Medtronic forecast revenue growth of 1 to 3 percent for the next fiscal year, or $16.1 billion to $16.41 billion. It expects to earn $3.43 to $3.50 per share.

Analysts were expecting $3.62 per share.