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Earnings Preview: Medtronic to report 2Q earnings

Mon, 11/22/2010 - 7:46am
The Associated Press

Medtronic Inc., the world's largest medical device maker, announces its fiscal second-quarter earnings Tuesday morning before markets open.

WHAT TO WATCH FOR: Last quarter the company reported a sharp drop in sales of pacemakers, stents and other medical implants. The company said the shortfall was caused by cost-cutting efforts by hospitals and a slowdown in medical procedures tied to unemployment.

Analysts expect the company's revenue to inch up less than 2 percent year over year to $3.9 billion with weak sales of spine implants and heart-pacing devices. Medtronic's spinal unit accounts for 20 percent of sales while heart devices make up 35 percent of sales.

WHY IT MATTERS: Medtronic is considered a bellwether for the broader medical device industry, and continuing weak performance would signal that the sector is moving into a tougher environment for its products. Wedbush Securities analyst Philip Nalbone predicts in a recent note that "the business pressures that led management to cut fiscal year 2011 guidance after the July quarter intensified during the October."

WHAT'S EXPECTED: Analysts polled by Thomson Reuters expect earnings per share of 81 cents on revenue of $3.9 billion

LAST YEAR'S QUARTER: The Minnesota-based company reported earnings of 78 cents per share on revenue of $3.8 billion.

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