By Angela Chen
Medtronic Inc. posted weaker sales in its core pacemaker
business in the October quarter, hurt by competition in the market
for implanted cardiac defibrillators.
Medtronic, which is expected to launch a new defibrillator
product soon, is facing strong pressure from Boston Scientific
Corp. and St. Jude Medical Inc. Its sales of implanted cardiac
defibrillators, which account for about 15% of total sales, dropped
5% in constant currency to $670 million, missing analyst
expectations of $680 million.
The medical device maker also backed its $43 billion commitment
to buy Covidien PLC, a move that would expand its portfolio to
include more surgical supplies and vascular and respiratory
care.
The merger remains on schedule to close in early 2015, Chief
Executive Omar Ishrak said. The companies plan to hold a special
meeting in January to seek shareholder approval of the merger.
Medtronic's plan to buy the Irish health-care-products company
has drawn scrutiny over a tax tactic criticized by U.S. government
officials. The acquisition plan involves Medtronic reincorporating
in Ireland, where Covidien is based, and becoming Medtronic PLC.
The tactic of reincorporating in another country, called a tax
inversion strategy, would lighten the company's U.S. tax
burden.
In all, Medtronic reported earnings for the second quarter ended
Oct. 24 of $828 million, or 83 cents a share, down from $902
million, or 89 cents a share, a year ago. Excluding charges such as
a $100 million donation to the Medtronic Foundation, per-share
earnings were 96 cents, compared with 91 cents a year earlier.
Revenue rose 5% to $4.37 billion from $4.19 billion.
Analysts polled by Thomson Reuters had called for earnings of 96
cents a share and revenue of $4.37 billion.
Medtronic's cardiac and vascular group posted a 5% revenue
increase to $2.29 billion. The restorative therapies group's
revenue grew 4% to $1.65 billion, while the diabetes group's
revenue increased 10% to $430 million.
The company backed its earnings guidance for the year.
Write to Angela Chen at angela.chen@dowjones.com
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