Merck Misses, Slashes Jobs

Following a general trend of large U.S. companies missing quarterly earnings and compounding the misery by announcing significant job cuts, New Jersey-based Merck & Co. (MRK) reported 3rd quarter 2008 earnings of 51 cents per share, missing the Zacks consensus of 79 cents.  The Big Pharma company also announced it will be cutting 7,200 jobs going forward.  Shares are down 2%, but this is on a down morning for the market, overall.

Merck, the maker of Singulair and Gardasil, saw its quarterly profit drop 28% on flat sales.  The earnings miss also comes after analysts had been split on estimate revisions ahead of the report.  For the December quarter and fiscal year 2008 estimates, analysts have been revising estimates decidedly downward.  Merck’s guidance for the year is betwen $3.28-$3.32 per share, which corresponds with the current Zacks consensus of $3.30 per share.

Properly assessing Merck’s need to cut costs in his most recent Hold report on the company, Zacks senior analyst Brian Marckx, CFA had this to say about the company’s outlook: “The patent expiration of Fosamax and the issues surrounding Vytorin and Zetia will slow revenue growth. EPS growth will come from continued cost-cuts.”

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