Boston Scientific to cut up to 600 jobs from cardiac division

BOSTON --Boston Scientific Corp. said it will eliminate 500 to 600 jobs from its cardiac rhythm division, with most of the cuts coming at a Minnesota-based office the company acquired in its $27 billion acquisition of Guidant Corp. last spring.

Boston Scientific also announced after markets closed Monday that it has seen a recent uptick in sales of so-called cardiac rhythm devices such as defibrillators, which had recently slumped after safety recalls involving Guidant products.

In morning trading Tuesday, shares of Boston Scientific rose 44 cents, or about 2.5 percent, on the New York Stock Exchange.

The job cuts, affecting about 2 percent of Boston Scientific's 29,000-person work force, will take effect in the first three months of the current year.

Spokesman Paul Donovan said the majority of cuts involve positions at Boston Scientific's Arden Hills, Minn.-based Cardiac Rhythm Management unit, acquired in the Guidant acquisition completed last April.

Natick-based Boston Scientific has sought to restore confidence in Guidant's defibrillator and pacemaker business after a string of recalls and safety warnings starting in 2005 resulting from device malfunctions.

Boston Scientific said the staff cuts would eliminate some research and development projects to focus on initiatives with the greatest potential.

"This plan will shift resources from less productive projects to more productive ones, reinvigorating our product pipeline and driving top-line growth," said Jim Tobin, Boston Scientific's president and CEO.

Employees affected by the cuts will be eligible for severance pay and help finding new jobs. The cuts will result in after-tax costs of about $70 million.

Meanwhile, Boston Scientific said sales of cardiac rhythm devices for the fourth quarter ended Dec. 31 were about $489 million, a 10 percent increase over the $446 million recorded in last year's third quarter. Defibrillator sales, which account for the bulk of cardiac rhythm sales, were up 13 percent to $356 million.

"We were pleased with our sequential quarterly sales increase, and we believe the CRM market is starting to resume its growth," Tobin said.

Two months ago, Boston Scientific said its overall sales could rise as little as 11 percent or as high as 21 percent in 2006, depending on how quickly the markets for defibrillators and for drug-coated stents recover from the recent downturns.

Boston Scientific bought Indianapolis-based Guidant and its lines of defibrillators and pacemakers to help offset increasing competitive challenges for the Taxus stent.

Minnesota-based rivals Medtronic Inc. and St. Jude Medical Inc. also announced positive news about the defibrillator market on Monday. Medtronic said it was planning to expand its presence in the market, while St. Jude reported rising defibrillator sales and released preliminary fourth-quarter revenue results that beat Wall Street expectations.