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Earnings fall 28%; job cuts planned

October 23, 2008|times wire services

Drug maker Merck & Co. said it would slash 7,200 jobs as part of a new restructuring program that comes as its third-quarter profit plunged 28% because of a hefty restructuring charge and flat sales.

The maker of allergy and asthma treatment Singulair and cervical cancer vaccine Gardasil said it would cut nearly 13% of its workforce to lower overhead and become more competitive in its second major restructuring in less than three years.

Merck shares closed down $1.96 at $28.01.

Whitehouse Station, N.J.-based Merck took a $612-million charge for restructuring, reducing net income for its third quarter to $1.09 billion, or 51 cents a share. That's down from $1.53 billion, or 70 cents, a year earlier.

Excluding the charge, equal to 29 cents a share, earnings per share would have been 80 cents, 1 cent better than Wall Street expected.

Despite a 4% boost from the favorable exchange rates, revenue was down 2% to $5.9 billion. Analysts surveyed by Thomson Reuters were expecting $6.1 billion.

The company narrowed its 2008 earnings forecast to $3.28 to $3.32 a share, excluding one-time items, from April's forecast of $3.28 to $3.38.

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