MEDTRONIC HAS posted a surprising decline in quarterly sales and has cut its forecast, due to weak demand for its medical devices and pressure on prices, sending its shares down nearly 12 per cent to a 15-month low.
The world’s number one stand-alone medical device-maker, which employs more than 2,000 people in Galway, reported quarterly profit in line with expectations. However, its weak sales and outlook weighed on the shares of rivals such as cardiovascular device companies Boston Scientific and St Jude Medical and orthopedic device-makers Stryker and Zimmer Holdings.
Analysts said results in two key Medtronic divisions, cardiac rhythm and spine, were particularly disappointing.
“This is very scary for the entire industry – you have utilisation dropping and price deflation . . . and we’re probably not even close to the half-way point in this cycle,” said analyst Tim Nelson of FAF Advisors, an asset management firm.
Medtronic chief executive Bill Hawkins said he was especially surprised by the weakness in its spine unit, the company’s second largest after Cardiac Rhythm Management, which makes implantable heart defibrillators, better known as ICDs, and pacemakers.
Medtronic cut its revenue growth outlook to 2 to 5 per cent for the fiscal year begun in April, down from the 5 to 8 per cent it forecast in June. It cut its earnings forecast to $3.40-$3.48 a share from $3.45-$3.55. – (Reuters)
