Moving to cut costs before its biotechnology spinoff, Abbott Laboratories eliminated 550 jobs globally Wednesday and announced plans to cut “several hundred more” positions in the next year. The company’s stock fell more than 4 percent.
Abbott spokesman Scott Stoffel said workers were notified Wednesday that the North Chicago health-care giant would be eliminating jobs in the nutrition, vascular, established pharmaceuticals and diagnostics departments. At least 100 of those jobs are in the Chicago area.
The company recorded a $406 million charge as part of its third-quarter results to cover the cost of the head-count reduction. Abbott is finalizing plans to split into two parts on Jan. 1. The vast majority of Abbott’s current business, including its blockbuster rheumatoid arthritis drug Humira, will be part of the new biotech company AbbVie Inc. The remaining business will focus on medical devices and retain the company’s original name.
“The businesses independently assessed the environment and competitive landscape. Today’s changes will enable our businesses to align their resources to better meet evolving business needs,” Stoffel said.
The news comes after Abbott executives held an earnings conference call with analysts to discuss its latest financial results. In the third quarter, Abbott’s bottom line increased by six-fold but much of the increase was attributed to one-time tax credits and lower litigation costs rather than improved operations.
Abbott reported net earnings of $1.94 billion, or $1.21 per diluted share, up from the $303 million, or 91 cents per diluted share, in the same period in 2011. Last year, Abbott was socked with a $1.5 billion settlement with the Justice Department for misbranding drugs.
Excluding special items such as the restructuring charge, Abbott would have earned $2.08 billion, or $1.30 per diluted share, up 13 percent from $1.85 billion, or $1.18 per diluted share, in the year-ago quarter. Analysts had been expecting Abbott to earn $1.28 on an adjusted basis.
Revenue for the company slipped less than 1 percent to $9.78 billion from $9.82 billion.
Abbott also narrowed its 2012 earnings guidance of $5.00 to $5.10 per share to $5.06 to $5.08. The company cited the AbbVie separation as the reason for the pullback. Michael Weinstein of JPMorgan said earnings per share were 2 cents higher than Wall Street was expected but Abbott sales were “softer than expected.”
“Abbott will be well-positioned among its peers for top-tier growth. The new Abbott will be one of the largest and most diverse investment opportunities,” said Abbott CEO Miles White. “We are preparing both Abbott and AbbVie to be successful. These are two separate investment opportunities with different business environments after separation.”
In the first nine months, Abbott earned $4.91 billion, or $3.06 per diluted share, up 58 percent from $3.11 billion, or $1.98 per diluted share, in the same period last year.
Sales in the nine-month period grew 2 percent to $29.04 billion from $28.47 billion last year.