Pfizer profit doubles, but anti-smoking drug lags

By Ransdell Pierson

NEW YORK (Reuters) - Pfizer Inc (PFE.N: Quote, Profile, Research, Stock Buzz) on Wednesday said quarterly earnings more than doubled on higher sales of its prescription drugs and lower expenses, but its Chantix quit-smoking drug lost more than a third of its U.S. sales amid safety concerns.

The company, whose shares rose 2.7 percent, earned $2.78 billion, or 41 cents per share, in the second quarter. That compared with $1.27 billion, or 18 cents per share, a year earlier, when Pfizer took large charges for restructuring and merger-related costs.

Excluding special items, Pfizer earned 55 cents per share. Analysts on average expected 54 cents per share, according to Reuters Estimates.

Company revenue rose 9 percent to $12.13 billion, but would have increased only 2 percent if not for the weak dollar, which boosts the value of overseas sales when converted back into U.S. currency. Reuters Estimates had expected revenue of $11.47 billion.

The world's largest drugmaker reaffirmed it expects earnings this year to grow as much as 11 percent, due largely to a cost-cutting program that has cut 25,000 jobs, or 23 percent of the company's work force, since late 2004. It said the company is on track to reduce costs by the end of the year at least $1.5 billion to $2 billion, compared with 2006.

"Pfizer beat on the bottom line obviously and beat on the top line" during the quarter, said Deutsche Bank analyst Barbara Ryan. "Their guidance clearly is being reiterated so everything is on track," she said, attributing the good quarterly results largely to benefits of its cost-cutting program.

Pfizer has vowed to protect its industry-topping dividend, whose $8 billion-a-year cost to Pfizer is roughly equivalent to the company's annual net income.

Even though the generous dividend keeps many investors faithful to Pfizer, company shares have lost more than a fourth of their value in the past year, compared with about a 13 percent decline for the American Stock Exchange Pharmaceutical Index .DRG of large U.S. and European drugmakers.