Boston Scientific Cuts Staff as Costs Persists
Boston Scientific Cuts Staff as Costs Persists
From Associated Press (February 11, 2010)
WASHINGTON -- Medical device maker Boston Scientific on Wednesday
posted a $1.1 billion loss in the fourth quarter after settling a
patent dispute with Johnson & Johnson, and said it will cut as
many as 1,300 jobs.
The company, based in Natick, Mass., said it will eliminate between
1,000 and 1,300 employees, or 8 to 10 percent of its work force.
The move is part of a larger reorganization that will combine the
company's heart implant division -- acquired with Guidant in 2006
-- with its stent business. The two units previously operated
separately, with different managers.
Boston Scientific said it expects charges between $180 million to
$200 million in connection with the cost-cutting effort.
CEO Ray Elliot said in a statement the changes are needed "to
fulfill the enormous promise of this company."
Boston Scientific's staff reductions follow similar moves across
the industry. Last spring Medtronic, the largest device firm in the
world, said it would eliminate at least 1,500 workers. In August,
Minnesota rival St. Jude Medical eliminated 200 positions.
Device makers have seen their sales squeezed by safety recalls of
top-selling products, as well as cutbacks at hospitals reeling from
the economic downturn.
Boston Scientific has focused on managing its debt in recent years,
especially costs tied to the $27 billion acquisition of medical
device rival Guidant. Earlier this month the company added a
massive payment to rival Johnson & Johnson to its
expenses.
The fourth-quarter results were weighed down by the $1.3 billion
legal charge, which settled yearslong patent disputes over
drug-coated stents. The devices are used to brace arteries after
they have been cleared of fatty plaque
The company posted a net loss of $1.1 billion, or 71 cents per
share, for the last quarter of 2009, compared with 2.4 billion, or
$1.59 per share, in the prior-year period.
The narrower loss was not enough to assuage investors, however, who
dropped the company's stock in after-hours trading. The shares fell
20 cents, or 2.4 percent, to $7.98.
Excluding one-time charges the company would have earned $304
million, or 20 cents per share.
Analysts polled by Thomson Reuters expected earnings of 13 cents
per share.
Revenue rose to $2.1 billion for the period, up from $2 billion in
2008's fourth quarter. The company posted higher sales from
implantable cardiac defibrillators, its largest franchise. Sales of
defibrillators and pacemakers combined rose 6 percent to $645
million for the period.
Defibrillators use powerful electric jolts to correct irregular
heart rhythms. They differ from pacemakers, which use low-voltage
electrical currents to keep hearts beating.
Sales of stents fell about 5 percent to $453 million. Two studies
released last year showed the company's Taxus stent was inferior at
preventing safety problems compared with those from competitor
Abbott Laboratories.
The company's full-year loss for 2009 was $1 billion, or 68 cents
per share, on revenue of $8.19 billion.
Looking ahead the company forecast full-year 2010 earnings between
62 and 72 cents per share, excluding one-time charges. Wall Street
expects earnings of 57 cents per share.
Posted: February 2010
