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LEGAL HIT: Medtronic, the world's largest medical device maker, reported a 35 percent drop in profit for the second quarter as legal expenses tied to defective heart devices outpaced weak gains in medical device sales.

DEVICE DEMAND: The company lowered its earnings guidance for the second half of the year, predicting weaker demand for its best-selling products, heart defibrillators and pacemakers. The company says the weak economy is squeezing hospitals and insurers, resulting in lower sales and tougher pricing competition among manufacturers.

SPINE SURPRISE: Spinal implants, one of the company's weakest-performing businesses, reported better-than-expected sales due to new products.

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