Medtronic CEO bemoans stock price "disconnect"

By Debra Sherman

MINNEAPOLIS (Reuters) - Medtronic Inc (MDT.N) Chief Executive William Hawkins says the biggest factor behind the company's weak share price compared with previous years has been poor communication with Wall Street.

"I don't think we've done a good job of managing expectations. We've overpromised and underdelivered. For years, we've aimed for the stars and landed on the moon," Hawkins said Tuesday in an interview following a daylong investor meeting at the company's Minneapolis headquarters.

The company, whose products include heart rhythm management devices, stents and insulin pumps, on Tuesday reiterated its earnings and revenue forecasts for the coming fiscal year during an upbeat presentation that highlighted growth prospects in all of its major businesses.

Sitting in his office at the end of the day, Hawkins acknowledged his frustration with Medtronic's languishing stock price, which he believes hasn't kept pace with the company's business success.

"I wouldn't be truthful if I said I wasn't highly disappointed in the disconnect with our performance and the stock price," Hawkins said.

For years, Medtronic's shares traded in the $50 to $60 range before descending to a low near $24 in March. The stock has rebounded somewhat since then, closing Tuesday at $35.83.

The company met expectations in the fiscal year that ended in April, delivering strong margins and cash flow while holding the line on expenses, Hawkins said, and he is confident in the outlook for the current year.

"You look at the stock and you say, 'what is wrong with this picture?'" the CEO said, throwing up his arms.

Yet many Wall Street analysts believe the company's new fiscal 2010 sales and earnings forecasts, unveiled for the first time two weeks ago, are too conservative. Some have said the company is deliberately setting the bar low in order to exceed expectations down the road.

Hawkins denies that is the case. "I wouldn't say we're lowering the bar," he said. "We're setting expectations appropriate for the markets we're in now."

He said Medtronic, the world's largest stand-alone medical technology company, expects to grow revenue 5 percent to 8 percent annually, which is above industry growth rates.

Hawkins, who assumed the role of CEO almost two years ago, said the company's board of directors has faith in his ability to manage and grow the company.

"I have complete support from the board, Hawkins said. "They get the strategic plan. Their view is that we are executing on it, and we are delivering on it."

(Reporting by Debra Sherman in Minneapolis and Susan Kelly in Chicago; Editing by Gary Hill)