Guidant earnings rise 49 percent

INDIANAPOLIS -- Guidant Corp. reported a 49 percent jump in first-quarter earnings Thursday as strong sales of the medical device maker's heart defibrillators and pacemakers offset a drop in sales of stents.\nGuidant also said it is discontinuing a radiation therapy coronary product amid growing sales of competitors' new drug-coated heart stents, a field in which Guidant trails rivals. The move, which led to an $11 million charge in the quarter, is expected to result in the layoffs of about 100 employees in Houston and Pearland, Texas.\nIndianapolis-based Guidant reported net income in the January-March period of $139 million, or 44 cents per share, compared with a profit of $93 million, or 30 cents per share, a year earlier. Sales grew 9 percent to $934 million from $858 million, boosted in part by more favorable currency exchange rates, in line with a forecast Guidant made April 6.\nThe results included a charge of $25 million for costs tied to Guidant's recent acquisition of AFx Inc.\nExcluding one-time charges, Guidant's first-quarter profit was 56 cents per share, compared with 60 cents per share a year earlier, when it recorded nearly $37 million in charges. The most recent quarter's performance beat the expectations of analysts polled by Thomson First Call by a penny.\nGuidant shares dipped 28 cents to close at $68.40 on the New York Stock Exchange.\nSales of defibrillators, which electrically jolt the heart back into rhythm in case of cardiac arrest, grew 22 percent to $405 million and accounted for 43 percent of Guidant's sales.\nPacemaker sales rose 13 percent to $180 million. But stent sales dropped 22 percent to $171 million after a 14 percent decline in the fourth quarter.\nGuidant has been a market leader in sales of bare-metal stents. But that market is shifting because of rivals' introduction of stents that slowly release drugs to help keep coronary arteries open after surgery. Johnson & Johnson and Boston Scientific Corp. have beaten Guidant in introducing such stents.\nGuidant recently announced a deal to team up with Cordis Corp., a unit of J&J, on a drug-coated stent that Guidant hopes will reach the U.S. market in early 2006. Guidant also recently settled patent disputes that have become a hallmark of the drug-coated stent market.\nGuidant cited that market's growth in announcing its cancellation of its Galileo radiation therapy to reverse scar tissue build-up in vessels treated with stents -- a condition treated by drugs coated on newer stents.\n"With the advent of drug-coated stents, there just is not demand for that therapy," said Ronald Dollens, Guidant's president and chief executive.\nGuidant forecasts a profit of 54 cents to 60 cents per share for the second quarter. The company reiterated full-year earnings expectations of $2.40 to $2.55 per share.\nGuidant was spun off from Indianapolis-based drug maker Eli Lilly and Co. in 1994. Most of Guidant's 12,000 employees are in Minnesota and California.