Medtronic Inc. (NYSE:MDT) plans to lay off up to 5 percent of its workers in a bid to shore up its long-term prospects, despite reporting strong third-quarter sales and earnings numbers.
The news means job losses for between 1,500 and 2,000 workers worldwide. The company said the move is meant to “align its cost structure to current market conditions and continue to position Medtronic for long-term sustainable growth.”
“We are delivering on our pipeline to drive share in our core markets and strong growth in emerging technologies,” chairman and CEO Bill Hawkins said in prepared remarks. “At the same time, we are restructuring our business and leveraging our global infrastructure to be more in-line with market conditions, which positions us well to deliver market-leading performance.”
Medtronic posted profits of $924 million, or 86 cents per diluted share, on sales of $3.96 billion for the three months ended Jan. 28. That’s a 2.9 percent top-line increase and an 11.2 percent boost to the bottom line when compared with earnings of $831 million, or 75 cents per diluted share, on sales of $3.85 billion during the same period last year.
International sales accounted for 43 percent of total revenues at $1.70 billion, with “emerging market revenue” of $350 million, up 26 percent.
Medtronic’s bread-and-butter cardiac and vascular group reported sales of $2.10 billion, up 2 percent. But its cardiac rhythm disease management arm saw sales slip by the same percentage to $1.22 billion, as implantable cardiac defibrillator sales were down 2 percent to $735 million. Pacemaker sales also slipped 2 percent to $450 million.
The Fridley, Minn.-based medical device monolith said its Physio-Control external defibrillator division delivered a sales increase of 4 percent, to $104 million, but added that the company plans to start shopping the unit again to potential buyers.
Medtronic lowered the top end of its fiscal 2011 diluted earnings per share estimate to $3.40 but held steady with its low-end forecast of $3.38 diluted EPS, saying it’s “comfortable” with analysts’ consensus estimate of $3.40. Its prior forecast predicted earnings of between $3.40 and $3.42. Full year sales are still expected to grow between 2 percent and 4 percent.
MDT shares were down 2.5 percent to $40.26 in mid-morning trading.