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By Susan Kelly
CHICAGO, Aug 4 (Reuters) - Advanced Medical Optics Inc EYE.N posted lower-than-expected quarterly earnings on Monday and cut its full-year profit forecast, as the weak U.S. economy hurt demand for LASIK vision-correction procedures.
"Obviously, the LASIK market has gotten a lot worse than what we thought in January," said Jefferies & Co analyst Peter Bye.
Advanced Medical shares, which initially plummeted more than 11 percent to new five-year lows on the news, recouped all of their early loss and turned higher to trade up 2 percent in the afternoon.
But Wall Street had anticipated weak U.S. LASIK procedure volumes as the U.S. consumer has grown cautious about spending on elective procedures.
"From a top-line or bottom-line standpoint, I don't envision changing my forward numbers," Bye said.
LASIK, short for laser-assisted in-situ keratomileusis, involves the use of a laser to reshape the cornea to correct eyesight.
Advanced Medical, a maker of eye-care products, as well as the lasers used in vision correction surgery, said second- quarter net income was $22 million, or 35 cents a share. In last year's second quarter, the company posted a net loss of $166.8 million, or $2.78 a share, as it booked costs from its recall of a contact lens solution and its April 2007 acquisition of IntraLase Corp.
Excluding special items in the latest quarter, Advanced Medical earned 24 cents a share. On that basis, the average forecast of analysts was 27 cents a share, according to Reuters Estimates.
Sales rose 22.6 percent to $320.5 million, boosted by a rebound in eye care product sales after a 2007 contact lens solution recall, strong overseas sales and strong cataract product sales.
Jim Mazzo, Advanced Medical's chairman and chief executive, said the company is taking share from competitors, despite the shrinking market and is focused on overseas expansion and cost reductions to offset weak U.S. demand.
Still, Advanced Medical cut its forecast for full-year earnings to a range of $1.00 to $1.15 per share before special items, down from a prior forecast of $1.25 to $1.45 per share. It cited a lower outlook for U.S. vision-correction procedures, forecasting a 25 percent drop in its volume from year-ago levels and 30 percent decline for the total market.
"We're obviously not pleased with having to reduce our guidance due to the U.S. economic conditions. However, I believe that the second quarter shows our focus on maximizing things we can control to enhance our earnings power," Mazzo told analysts on a conference call.
The Santa Ana, California-based company left its full-year revenue outlook unchanged at $1.22 billion to $1.24 billion.
Advanced Medical shares were at $17.48, up 28 cents, in afternoon trading on the New York Stock Exchange.
Last week, LCA-Vision Inc, which operates a chain of LASIK surgery providers, said procedure volume plunged 38 percent in the second quarter and it cut 25 percent of it work force. (Reporting by Susan Kelly; editing by John Wallace and Steve Orlofsky)