NEW YORK — Bristol-Myers Squibb Co. on Wednesday cut its first-quarter revenue and earnings forecasts amid poor sales of key drugs and said it was taking steps to remedy its "unacceptable" performance.
Bristol-Myers said it plans to cut excess stockpiling by wholesalers, reduce costs and implement a management shake-up that includes the departure of Richard Lane, president of worldwide medicines. Chief Executive Peter Dolan has assumed command of the pharmaceutical business.
The promise to revamp the company follows setbacks that have lowered its stock price by more than 40% in the last six months and spurred discussion that the company is a takeover target.
Shares of the New York-based firm tumbled to a four-year low Tuesday after Bristol-Myers said surplus stockpiling last year of its medicines by wholesalers would crimp demand for its products. On Wednesday, Bristol-Myers shares plunged as much as 16% to $31.65 in after-hours trading, after falling 26 cents to $37.70 on the New York Stock Exchange.
"The company's current business performance is unacceptable and I am taking steps today, and may take additional actions in the future as necessary, to strengthen our organizational structure, focus our priorities and accelerate our future growth," Dolan said after markets closed.
Dolan, who took over as CEO in May 2001, said strong measures were "absolutely necessary" for the company's future.
But not all analysts were convinced the announced actions were sufficient.
"These guys are just completely incompetent," said Barbara Ryan, an analyst at Deutsche Bank Securities. "The guy at the head of the ship, who has destroyed untold value, is now taking over running the whole thing. And we're supposed to be comforted by that?"
Bristol-Myers said earlier this week that it would adjust its first-quarter forecast. But the extent of the shortfall in revenue and earnings was worse than analysts had expected.
"What's surprising is the magnitude of the reduction," Ryan said.
Bristol-Myers said Wednesday that it expected first-quarter earnings to be between 44 cents and 47 cents a share.
That is well below the 56 cents expected by Wall Street analysts and reflects a 25% to 30% decline in earnings from the same quarter last year.
Bristol-Myers said it expects earnings per share to fall 25% to 30% for the full year. But the forecast excludes the negative effect of the cost of reducing wholesaler inventories, which it said was equivalent to about 35 cents to 40 cents a share.
The firm earned $2.41 a share in 2001, a 12% increase over 2000. The company estimates sales for this year will decline to the low single-digit-percentage range compared with 2001.
Bristol-Myers also said it expects first-quarter revenue to be down 7% from the same quarter last year, following patent expirations on many of its key drugs that have ushered in a wave of cheaper generic rivals.
The company has lost patent protection on three of its key products in the last 18 months.
In February, clinical trial data was less than impressive for the most important drug in the company's pipeline--an experimental blood pressure treatment called Vanlev.
And its $2-billion partnership with ImClone Systems Inc., which was engineered by Dolan, received a crushing blow in December when U.S. regulators refused to accept ImClone's marketing application for the cancer drug Erbitux.
Dolan has been dubbed a spendthrift by some analysts for plunking down so much to acquire partial rights to Erbitux and for paying almost $8 billion last year for DuPont Co.'s pharmaceuticals arm--about $2 billion more than rival bidders.