Medtronic to cut 1,500-1,800 jobs

<p>Medtronic will cut 1,500 to 1,800 jobs worldwide as the medical device maker feels the impact of the stalled economy, company officials said Tuesday. </p><p>But no new cuts are planned in Santa Rosa, spokesman Joe McGrath said. Over the past three weeks, one-fourth of Medtronic’s Santa Rosa workers have lost their jobs in two rounds of layoffs.</p><p>The Santa Rosa-based vascular unit is one of the largest manufacturers in Sonoma County, making stents and stent grafts for treating artery disease and aneurysms. The division rang up almost $1.7 billion in sales during its just-completed fiscal year, jumping 20 percent from the previous year. </p><p>But sales rose just 1.4 percent in the fourth quarter, compared to a year ago, a sign that demand has slowed dramatically in recent months. </p><p>Companywide, Medtronic profits fell 69 percent in the fourth quarter because of slumping sales, restructuring costs and other charges. </p><p>In April, Medtronic said it is shifting 240 Santa Rosa manufacturing jobs to a lower-cost production facility in Ireland. Those cuts, which had been scheduled since last summer, are not part of the downsizing announced Tuesday. </p><p>Medtronic began implementing its latest restructuring plan last week in Sonoma County, when it laid off about 60 white-collar workers in Santa Rosa. The employees include researchers, marketing professionals, project coordinators and technicians. </p><p>Both rounds of layoffs will leave Medtronic with about 840 workers in Santa Rosa, down from 2,800 in 2000. </p><p>The Santa Rosa division’s endovascular products were a bright spot for Medtronic last quarter. They include stent grafts, metal mesh tubes used to reinforce weak spots in arteries known as aneurysms. Without treatment, aneurysms can burst, causing internal bleeding and death. </p><p>Endovascular revenue in the U.S. grew 70 percent in the fourth quarter, fueled by sales of Medtronic’s Talent abdominal and thoracic stent grafts. </p><p>Outside the U.S., the division’s Endurant abdominal stent graft drove a 60 percent sales increase. Medtronic’s global endovascular sales hit $398 million for the full year, 40 percent above the prior year. </p><p>“This is well on its way to being a $500 million business,” Medtronic CEO Bill Hawkins told Wall Street analysts Tuesday. </p><p>But another high-profile vascular product, the Endeavor drug-coated stent, has seen domestic sales fall since it was launched in the U.S. last year. </p><p>Endeavor was hurt by competition from new stents made by Boston Scientific Corp. and Abbott Laboratories. Sales of Medtronic’s coronary stents, including Endeavor, dropped 15percent in the fourth quarter. </p><p>Medtronic’s adjusted earnings matched Wall Street expectations, but shares fell 6.5 percent Tuesday after the company forecast disappointing earnings guidance and announced the layoffs.</p><p>The company recorded a $27 million restructuring charge in connection with the job cuts, which are aimed at streamlining operations for underperforming units, such as cardiac surgery. About 400 employees already have accepted buyout offers and will leave the company by the end of the month.</p><p>Company shares fell $2.20 to $31.76 at Tuesday’s close.</p><p>Medtronic, the world’s largest medical-device company, is seen by analysts as a safe bet during economic downturns because it sells a broad range of devices that are medical necessities. But the company has stumbled in recent quarters following safety-related concerns with its implantable devices. The company has lost share of its top-selling implantable defibrillators to rivals like Boston Scientific, after a 2007 recall linked to cracked heart wiring.</p><p>The Minneapolis-based company said it earned $250 million, or 22 cents per share, in the three months ended April 24, down from $812 million, or 72 cents per share, a year earlier.</p><p>The company took charges connected with the restructuring. The company also paid a hefty charge to Johnson & Johnson related to a patent dispute over stents and absorbed costs of purchasing Corevalve and Ventor, makers of artificial heart valves.</p><p>Excluding charges, the company said it earned 82 cents a share. That matched the consensus of analysts surveyed by Thomson Reuters.</p><p>Quarterly revenue slipped 1 percent to $3.83 billion from $3.86 billion a year earlier. Analysts expected revenue of $3.84 billion.</p><p>Sales of heart-rhythm management devices, the company’s top-earning unit, fell 5 percent to $1.3 billion, offsetting some slight gains from the spinal and biologics device unit and the neuromodulation device unit. Sales rose 1 percent in the spinal and biologics unit to $881 million, and 2 percent in neuromodulation to $389 million. </p><p>The Associated Press contributed to this report.</p>