* 3rd-qtr earnings $1.30/share vs Street view $1.28
* Sales $9.77 bln vs Street view $9.93 bln
* Sales growth of top drug Humira slows
* Shares fall 4.2 percent
By Ransdell Pierson
Oct 17 Abbott Laboratories Inc posted
disappointing quarterly sales on slower growth of its top drug,
arthritis treatment Humira, and provided new details of its
planned split into two companies in January.
The diversified healthcare company, which sells traditional
drugs, medical devices and nutritional products, also reported
higher third-quarter earnings on Wednesday, beating
expectations, despite a slight decline in overall sales.
Sales of Humira, by far its biggest product, rose 10.1
percent to $2.33 billion, a slowdown from growth of almost 17
percent in the prior quarter.
RBC Capital Markets analyst Glenn Novarro said Humira "came
in $50 million light" due to weaker overseas sales.
Humira is expected to be the cornerstone of a planned
spinoff on Jan. 1 of Abbott's branded drugs business into a
publicly traded company called AbbVie, which will have annual
revenue estimated at more than $18 billion.
The remaining Abbott, nicknamed "new Abbott," is expected to
have 2013 sales of $23 billion from diagnostics, nutritional
products, heart stents and generic medicines, Abbott said.
"Our shareholders will soon benefit from two fundamentally
different investment opportunities with distinct strategic
profiles and business priorities," Abbott Chief Executive Miles
White told investors in a conference call.
But Novarro said Abbott officials spooked investors on the
call by forecasting that AbbVie would have a tax rate of about
22 percent, instead of the mid-teens rate that Wall Street
"So that dilutes the earnings power of the pharmaceuticals
company," Novarro said. "There will be a little less enthusiasm
for AbbVie." Consequently, Abbott shares were revalued lower on
Wednesday, he said.
Abbott shares were down 4.2 percent to $69.08 in afternoon
AbbVie will pay investors an annual dividend of $1.60 per
share, while "new Abbott" will pay a dividend of 56 cents per
share. Abbott previously said the combined dividends would at
least equal the company's current annual dividend of $2.04.
Abbott said it earned $1.94 billion, or $1.21 per share, in
the third quarter, compared with $303 million, or 19 cents per
share, in the year-earlier period, when the company took a $1.4
billion litigation-related charge.
Excluding special items, Abbott earned $1.30 per share.
Analysts, on average, expected $1.28, according to Thomson
Global sales fell 0.4 percent to $9.77 billion, short of
Wall Street expectations of $9.93 billion. Sales would have
risen 4.1 percent if not for the strong dollar, which lowered
the value of sales in overseas markets.
Jefferies & Co analyst Jeffrey Holford said sales missed
Wall Street forecasts due to pressures on Abbott's vascular,
diagnostics and generic drugs businesses. He said tight expense
controls enabled the company to beat earnings forecasts.
Abbott narrowed its full-year 2012 profit forecast to a
range of $5.06 to $5.08 per share, from an earlier outlook of
$5.00 to $5.10.
Revenue from Abbott's array of patent-protected prescription
drugs, which it calls proprietary pharmaceuticals, rose 2.4
percent in the third quarter to $4.42 billion, while sales of
nutritional products rose 4.5 percent to $1.6 billion. Growth in
both categories slowed from the second quarter.
The company took a charge of $478 million in the latest
quarter for new and previously announced restructuring
activities across most of its businesses.
Company spokesman Scott Stoffel on Wednesday said the steps
included layoffs of 550 people worldwide from the "new Abbott"
business and another "several hundred" layoffs expected in 2013.
"Proprietary pharma, which will be AbbVie, is unaffected,"
he said. In all, he said the layoffs represent about 1 percent
of Abbott's 91,000 employees worldwide.