Merck’s Quarterly Profit Surges on Sales and Cost Savings

 

The results beat Wall Street expectations and suggest drug sales and cost savings from acquiring Schering-Plough were starting to pay off.

Merck shares rose 18 cents Friday to close at $35.95. Net income in the quarter was $1.04 billion, or 34 cents a share, up from $299 million, or 9 cents a share, in 2010’s first quarter.

Revenue edged up 1 percent to $11.58 billion. That includes several billion dollars from products added in the Schering-Plough acquisition in November 2009. Excluding numerous one-time items, net income was $2.86 billion, or 92 cents a share.

On that basis, analysts had forecast earnings of 84 cents a share and revenue of $11.38 billion. Analysts typically exclude one-time items in their estimates.

The $1.82 billion in net charges included $1.58 billion in merger-related write-downs on the value of assets and research, $126 million in restructuring costs and a $500 million payment to settle arbitration with Johnson & Johnson over the rights to two drugs. A year ago, Merck had charges totaling $2.31 billion.

Merck, based in Whitehouse Station, N.J., raised the bottom end of its 2011 profit forecast by 2 cents, predicting $3.66 to $3.76 a share, or $2.04 to $2.39 including one-time charges.

Production costs fell 22 percent to $4.06 billion, partly because Merck has sold some factories.

A Jeffries & Company analyst, Ian Hilliker, wrote to investors that the higher revenue and lower-than-expected costs gave Merck a strong “earnings beat.”

Top-performing drugs included Singulair and Januvia, plus some drugs acquired with Schering: the allergy spray Nasonex and Remicade for immune disorders. Their growth was partly offset by a $356 million drop in revenue from two former blockbuster heart drugs, Cozaar and Hyzaar, caused by generic competition.

Januvia and Janumet, a pill that combines Januvia with the generic diabetes drug metformin, had combined quarterly sales that topped $1 billion for the first time, up 47 percent.

Total pharmaceutical revenue rose 2 percent to $9.82 billion. Two units Merck acquired with Schering, animal health and consumer health, also performed well. Animal health revenue rose 7 percent and consumer health 6 percent, on strong sales of Claritin allergy pills and Coppertone sun care products.

 

Intel’s Quarterly Profits Are Lifted by Sales of Chips for High-End Servers

Despite facing one challenge after another in the first quarter, Intel posted strong profits on higher sales across its product line. The results surprised many investors, as well as Intel executives, who had projected a far bleaker quarter after a product recall, consolidation after two acquisitions and the effects of the Japanese earthquake on production.

The first quarter “was a very strong quarter and significantly better than we expected,” Stacy J. Smith, Intel’s chief financial officer, said in an interview on Tuesday.

The company had exceptionally strong sales of chips for high-end server computers that power corporate data centers and the Internet. This market for “cloud computing” is helping Intel weather the slowdown in other areas of the computer market.

“Intel continues to have a very strong position in the higher end of the market,” said Ashok Kumar, an analyst with Rodman & Renshaw. “Their position there is golden.”

Intel appears to have managed to turn a disastrous product introduction into one of its most successful chips. A technical error in a companion chipset to the company’s long-awaited Sandy Bridge processor led the company to quickly issue a recall, fix those chips and then to reissue the product. The problem, Intel executives said, did not hurt Intel’s bottom line.

“Early demand has been outstanding,” said Paul S. Otellini, Intel’s chief executive, in a conference call with analysts.

Quarterly profit rose 29 percent to $3.16 billion, or 56 cents a share, up from a profit of $2.44 billion, or 43 cents a share, in the first quarter last year. Revenue for the quarter was $12.8 billion, up 25 percent from $10.3 billion a year ago. Revenue in Intel’s data center group grew 32 percent.

The report beat Wall Street’s forecasts handily. Analysts surveyed by Thomson Reuters had forecast revenue of $11.6 billion and earnings of 46 cents a share for the quarter. Intel’s profit margin was 61 percent for the quarter, in line with expectations.

Intel forecast second-quarter revenue of $12.5 billion to $13.3 billion.

The company announced the results after the close of the markets on Tuesday. Shares of Intel rose almost 5 percent in after-hours trading, after closing up 24 cents at $19.86.

With the PC industry facing mounting pressure from low-price tablet computers and smartphones, Intel executives said that the company planned to pursue both those areas. “We remain committed to success in the smartphone market,” Mr. Otellini said.

Kevin Cassidy, an analyst with Stifel Nicolaus, said the strong results showed that smaller devices had not hurt PC demand as much as some might have thought. “It shows there’s still a need for PCs in the world,” he said.

During the quarter, Intel closed on the acquisitions of Infineon Wireless Solutions and McAfee. The combination of both acquisitions contributed revenue of $496 million. Mr. Otellini told analysts that the earthquake and tsunami in Japan had closed its offices in the area but that Intel’s supply chain was not seriously affected.

Intel’s results come amid concerns about the overall health of the PC market. Just last week, the research company IDC released a report saying that the global PC market declined 3.2 percent during the first quarter, the first major contraction since the economic recession began. The company originally predicted quarterly growth of 1.5 percent over last year.

In explaining its gloomier view, the report pointed to rising fuel and commodity prices, combined with supply constraints caused by the recent earthquake and tsunami in Japan.

The Intel executives assured analysts that the company was not experiencing such a contraction, but rather the opposite, particularly in emerging markets. However, demand in the United States market remained soft, the executives said.

In the fourth quarter, Mr. Otellini said that he expected Intel’s revenue to grow about 10 percent for the full year. But in January, company executives said growth would probably be in the mid- to high teens. On Tuesday, Mr. Otellini adjusted that forecast yet again, projecting revenue growth of more than 20 percent.

“All of our product segments are growing,” Mr. Otellini said. “Over all, we are beginning 2011 with great momentum.”

 

Earthquake Damage at Plants Affects Quarterly Income at Texas Instruments

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在 ServiceModel 客户端配置部分中，找不到引用协定“TranslatorService.LanguageService”的默认终结点元素。这可能是因为未找到应用程序的配置文件，或者是因为客户端元素中找不到与此协定匹配的终结点元素。

DALLAS (AP) — The chip maker Texas Instruments said Monday that production setbacks linked to the March 11 earthquake and tsunami in Japan curbed its first-quarter net income and would cut into second-quarter growth.

Richard K. Templeton, the Texas Instruments chief executive, said that the quarter started strong, but the Japan earthquake damaged two of its factories in the country and disrupted local demand. He said that one of the company’s Japanese factories would soon be back in full production and that he expected the second factory damaged by the quake to be running at full speed in July, as predicted. But many of the company’s Japanese customers are still working on reopening their factories, which could result in supply chain issues.

“We expect growth in the second quarter, though it will be pressured by the situation in Japan. Provided consumer and enterprise demand remain strong, we expect a good second half of the year,” Mr. Templeton said.

For the quarter, Texas Instruments earned $666 million, or 55 cents a share, compared with $658 million, or 52 cents a share, in the first quarter of 2010. The company said repercussions from the quake trimmed $30 million, or 2 cents a share, from results.

Revenue rose 6 percent, to $3.39 billion.

On average, analysts had expected earnings of 58 cents a share on nearly $3.40 billion in revenue, according to FactSet.

Revenue from T.I.’s analog chip unit rose 12 percent, to $1.54 billion. Revenue from its wireless chip unit fell 8 percent, to $658 million, partly because of “substantially weaker demand” for wireless baseband chips.

Shares of Texas Instruments, which is based in Dallas, fell 54 cents, to $34.25, in after-hours trading. They fell 20 cents in regular trading, to $34.79.

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