updated 5/19/2009 11:29:41 AM ET 2009-05-19T15:29:41

Medtronic said Tuesday it would cut 1,500 to 1,800 employees after posting a fiscal fourth-quarter profit that plunged 69 percent on slipping sales and restructuring and other charges.

Its adjusted earnings matched Wall Street expectations, but shares fell in morning trading after the world's largest medical-device company forecast disappointing earnings guidance and announced the layoffs.

The company said it recorded a $27 million restructuring charge cut in connection the jobs cuts, which are aimed at streamlining operations. About 400 employees already have accepted buyout offers and will leave the company by the end of the month.

Medtronic is seen by analysts as a safe bet during economic downturns because it sells a broad range of devices that are medical necessities. But the company has stumbled in recent quarters following safety-related concerns with its implantable devices. The company has lost share of its top-selling implantable defibrillators to rivals like Boston Scientific Corp., after a 2007 recall linked to cracked heart wiring.

The Minneapolis-based company said it earned $250 million, or 22 cents per share, in the three months ended April 24, down from $812 million, or 72 cents per share, a year earlier.

The company took charges connected with streamlining operations and cutting jobs as part of a restructuring program. The company also paid a hefty charge to Johnson & Johnson and absorbed costs of purchasing Corevalve and Ventor, makers of artificial heart valves.

Excluding charges, the company said it earned 82 cents per share. That matches the consensus of analysts surveyed by Thomson Reuters.

Revenue slipped 1 percent to $3.83 billion from $3.86 billion a year earlier. Analysts expected revenue of $3.84 billion.

Sales drop
Sales of heart-rhythm management devices, the company's top-earning unit, fell 5 percent to $1.3 billion, offsetting some slight gains from the spinal and biologics device unit and the neuromodulation device unit. Sales in those units rose 1 percent to $881 million and 2 percent to $389 million respectively.

Chief Executive Bill Hawkins said the company is beginning to see the implantable defibrillator market regain ground after several years of flat sales. He added that upcoming study results looking at the life-saving benefits of the implants could help sales.

"There are some good things that are happening, which we think will stabilize the implantable defibrillator market," Hawkins told analysts.

Sales of heart surgery products remained flat at $644 million. The products include catheters and angioplasty balloons, which are used to clear fatty plaque from the arteries, as well as mesh-metal stents, or tiny tubes used to prop open the arteries once they've been cleared.

The company said a stronger U.S. dollar cut into the value of overseas sales, partially causing the overall revenue dip.

For the full fiscal year, the company earned $2.29 billion, or $2.04 per share, up from profit of $2.23 billion, or $1.95 per share, in fiscal 2008. Revenue rose to $14.6 billion from $13.52 billion.

Hawkins said the results reflect the company's efforts to invest in new products while streamlining operations.

Looking ahead, the company expects fiscal 2010 profit between $3.10 and $3.20 per share, while analysts expect $3.21 per share. Assuming no shifts in currency exchange rates throughout the fiscal year, the company expects a 5 percent to 8 percent boost in revenue.

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