October 29, 2009 / 8:51 PM / in 10 years

CORRECTED - UPDATE 1-Varian Medical 2010 forecast below expectations

(Corrects first bullet point to Q4 sales from Q3)

* Q4 sales rise 8 pct to $642 mln, well above forecast

* Forecasts 2010 profit below Wall Street expectations

* Shares fall 2.9 pct in after-hours trading

NEW YORK, Oct 29 (Reuters) - Varian Medical Systems Inc (VAR.N) on Thursday forecast 2010 earnings below Wall Street expectations, but its fiscal fourth quarter earnings beat expectations due to cost cuts and newer cancer products and services that have higher profit margins.

The provider of software and equipment for cancer clinics, whose shares fell 2.9 percent in after-hours trading, reported net income from continuing operations of $97 million, or 78 cents per share. That compared with $87.1 million, or 70 cents per share, in the year-earlier period.

“Weak orders in the second half of fiscal year 2009 together with ongoing uncertainty stemming from the recession, the healthcare reform movement and proposed cuts in reimbursements in North America give us a cautious outlook for fiscal year 2010,” company Chief Executive Officer Tim Guertin said in a release.

Analysts on average expected 74 cents per share, according to Thomson Reuters I/B/E/S.

Quarterly revenue rose 8 percent to $642 million, well above analysts’ expectations of $593 million.

For fiscal 2010, the company said its revenue and operating earnings could increase by 4 percent to 5 percent and that its net earnings per diluted share from continuing operations could be in the range of $2.65 to $2.75.

Wall Street has been expecting a profit next year of $2.79 per share.

The company’s stock fell to $41 from its closing price of $42.22 on the New York Stock Exchange. (Reporting by Ransdell Pierson; editing by Andre Grenon)

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