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Bristol-Myers Lowers Profit Forecast

October 29, 2005|From Associated Press

Drug maker Bristol-Myers Squibb Co. said Friday that its third-quarter net income rose 27%, largely on the sale of its U.S. and Canadian nonprescription medicines business.

But Bristol-Myers shares fell more than 3% as the New York-based company missed Wall Street's forecast and lowered earnings guidance for the year a day after the firm said it might abandon development of a major drug.

The company said it earned $964 million, or 49 cents a share, in the third quarter, up from $758 million, or 38 cents, a year earlier.

Sales were essentially flat at $4.77 billion versus $4.78 billion in the year-earlier quarter as the maker of Pravachol for high cholesterol and Plavix, an anti-clotting agent, continued to struggle with generic competition.

After charges and extraordinary items, the company earned 31 cents a share, missing by 2 cents the estimate of analysts surveyed by Thomson Financial.

Bristol-Myers, citing a higher tax rate and increased advertising expenses, among other factors, also said it expected its full-year earnings from continuing operations to be in the middle of its previously announced guidance of $1.35 to $1.45 a share. The company had previously said earnings would be near the top of the range.

Shares of Bristol-Myers fell 53 cents to $21.14, a 52-week low.

During the quarter, Bristol-Myers sold U.S. and Canadian operations that made over-the-counter remedies, including Excedrin pain reliever and Keri lotions, to Swiss company Novartis and recorded a $569-million gain on the sale.

The move was part of a strategy Bristol-Myers implemented about two years ago to concentrate on 10 disease categories with few available medicines in hopes of avoiding the price competition endemic in areas with many treatment options.

Bristol-Myers' new direction hit a snag Thursday when it announced that it might abandon development of diabetes drug Pargluva -- a medication it touted as a key to its turnaround -- because it would take about five years to conduct additional tests necessary to address regulators' questions.

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