(Recasts first paragraph; adds analyst comment, byline; updates stock price)
By Debra Sherman
CHICAGO, Feb 14 (Reuters) - Advanced Medical Optics Inc EYE.N reported a wider quarterly loss on Thursday and cut its 2008 outlook on expectations that fewer patients will seek LASIK vision correction procedures because of the weakness in the economy.
Yet shares rose as much as 10 percent on what some analysts characterized as a “relief” rally, as the company unveiled a cost-cutting plan, including job cuts, designed to save up to $12 million annually.
“To ensure we are maximizing the earnings and cash flow power of the global footprint we have created, we need to be diligent in our effort to improve efficiency and productivity. We expect to accomplish this through staff reductions and infrastructure changes designed to reduce fixed costs, improve operating leverage and enhance long-term cash flow,” CEO Jim Mazzo said in a prepared statement.
The Santa Ana, California-based maker of eye-care products, intraocular lenses and lasers used for vision correction has about 4,200 employees worldwide, according to its Web site. It acquired IntraLase Corp and WaveFront Sciences Inc last year.
Advanced Medical lowered its outlook for 2008, citing a weakening economy that has led to a reduction in LASIK procedures.
“This is one of the first times the Street has been ahead of the company on (2008) estimates,” said BMO analyst Joanne Wuensch. “But the main thing is that they’re addressing their cash situation with a restructuring plan ... I think this is a relief rally, and there’s probably a lot of short-covering.”
For the fourth quarter, it posted a net loss of $12.3 million, or 20 cents per share, compared with a year-earlier loss of $7.6 million, or 13 cents per share.
Expenses tied to a product recall last year, losses on derivative instruments, and acquisition-related charges undermined results in the latest quarter.
Net sales rose to $304.6 million from $243.6 million a year earlier.
For 2008, the company cut its adjusted earnings forecast to a range of $1.25 to $1.45 per share, and its revenue forecast to a range of $1.22 billion to $1.24 billion. It previously forecast $1.55 to $1.75 per share on revenue of $1.23 billion to $1.25 billion.
Adjusted earnings exclude charges and write-offs related to acquisitions, reorganizations and recapitalization, unrealized gains or losses on derivative instruments, and other one-time items.
According to Reuters Estimates, analysts’ average profit estimate for 2008 has been $1.36 per share on revenue of $1.22 billion.
The company said it would take a charge of $25 million to $30 million this year to implement its cost-cutting strategy. It forecast 2008 savings of $4 million to $7 million, and $10 million to $12 million annually thereafter.
After the first six weeks of 2008, said Mazzo, “we have seen the deteriorating U.S. economy negatively impact our domestic LASIK procedure volumes. We have multiple, unique growth drivers that we believe will mitigate our exposure to a slowdown in the elective refractive procedure market, but we feel a more conservative view is prudent at this time.”
The company said its 2008 outlook assumes a 10 percent decline in its U.S. excimer vision correction procedures, compared with its prior expectation of 6 percent growth. It also assumes a more modest rate of growth for its U.S. femtosecond correction procedure and for sales of refractive intraocular lenses, artificial implanted lenses, than previously expected.
Advanced Medical shares were up $1.95 to $23.21 in midday trade on the New York Stock Exchange after reaching as high as $23.45 earlier. (Reporting by Debra Sherman in Chicago and Euan Rocha in New York, editing by Gerald E. McCormick and John Wallace)