Medtronic To Cut Up To 2,000 Jobs

WASHINGTON (AP) — Medtronic, the world’s largest medical device maker, said Tuesday it will lay off up to 2,000 workers as part of a restructuring effort to make up for anemic sales of its implants.

The company said the cuts are aimed at achieving “long-term sustainable growth” and will reduce its 41,000-person work force by 4 to 5 percent. The company did not offer specifics on where the cuts would be made, but said a charge is expected in the fourth quarter.

“We’re looking at the infrastructure across the organization to see where we can be more productive,” said Chief Financial Officer Gary Ellis, in an interview with the Associated Press. Medtronic’s last layoffs were in 2009, when it eliminated more than 1,500 positions.

Medtronic shares fell 95 cents, or 2.3 percent, to $40.32 in morning trading.

Outgoing Chief Executive Bill Hawkins explained that growth in the device sector has fallen from 10-15 percent a decade ago, to low-single digits.

“I strongly believe the demand is there to see this industry reaccelerate, largely driven by the success of innovation coming out of our pipeline and the demand from emerging markets,” said Hawkins.

In late December, Medtronic announced that Hawkins will step down in April after three years leading the company. During his tenure the company has faced weakening sales of its products, due to safety recalls and recession-linked job losses that have reduced the number of insured Americans able to receive its devices.

The Minneapolis-based device maker has scaled back its earnings estimates twice in the past year and forecast an anemic 2 to 3 percent growth in the global market for devices.

The layoffs announcement came as Medtronic reported third-quarter net income rose 11 percent to $924 million, or 86 cents per share. Adjusted earnings totaled $922 million, or 86 cents per share, which was slightly better than Wall Street estimates.

Analysts polled by FactSet expected earnings per share of 84 cents on sales of $3.97 billion.

Wells Fargo analyst Larry Biegelsen attributed the better-than-expected performance to a lower tax rate, which was aided by research and development credits and other one-time benefits.

Sales of defibrillators and pacemakers combined fell 2 to $1.22 billion for the quarter, while sales of stents, heart valves and other heart implants grew 7 percent to $774 million, helped by sales in China, Latin America and other emerging markets. Defibrillators, the company’s best-selling product, use electrical jolts to correct heart attack and other life-threatening heart rhythms. They differ from pacemakers, which use low-voltage currents to keep hearts beating steadily.

Sales of restorative therapies, which include spinal, diabetes and other products, rose 4 percent to $1.86 billion. Within that group, spinal sales increased 2 percent to $861 million, which was ahead of analyst estimates for $850 million. Executives attributed the performance to the launch of its Solera spinal system, a smaller, next-generation device for patients undergoing spinal fusion.

Spinal procedures tend to be expensive and highly invasive and the rate of procedures has not kept pace with company estimates.

Despite improved performance, the company again lowered the range of its full-year fiscal 2011 earnings estimate.

The company expects earnings between $3.38 and $3.40, including the cost of a recent acquisition. That’s down from $3.38 to $3.44 previously. Analysts expect earnings per share of $3.40.

(© Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

NewsRadio 830 WCCO’s Steve Murphy Reports

  • albert

    Gotta inflate those earnings. Gotta pander to those fund managers. Gotta grow no matter what.

    What exactly is wrong with a company pulling in $4B per year consistently? Why flamethrower 5% of your staff just to pump earnings for one year?

    Just say no to the wall street parasites who demand this sort of behavior so that they get more revenue running past them for them to skim off a percentage for doing NOTHING.

    • Tom


      I totally agree with you! Once again it is the little guy who gets too bear the brunt of it. While everything stays the same for the people at the top!

  • MN Woker

    We lost our jobs again. Is our economy head out over sea. what’s next???

  • Tom

    somemore jobs lost to over seas I know someone who works and that is whats happening

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  • Mike

    Well, maybe they should get the Republicans to lower minium wage. That way Medtonics wouldn’t need to manufacture in those GD Communist countries!

  • Private sector...

    In this economy, everyone needs to tighten their belts, layoffs are a real possibility everywhere as enormous shifts occur from developed countries to developing countries. We use to take our money even farther. If you can’t make more, the best you can do is get for the money you have…

    • Keith

      All these company in China and Mexico are USA company. All the stuff they make over there, they are selling it back to us (USA). not developed countries, you mean low labor countries.

  • Keith

    This is why global economy doesn’t work. how can we (USA) compete with Mexico or China? I don’t blame the company for leave. I blame USA government for this global economy. Why you think every state is in debt, because no job mean no money (tax) go back to the state. It’s a dominoes effect, it’s starting to happen. when was the last time you heard teacher, nurse, police getting layoff. The government need to do something.

  • MR Wake-Up Call

    Looks like ObamaCare is forcing companies to layoff already. I predict %25 unemployed within the year. Can’t have endless wars and fre healthcare and expect the economy to survive.

  • Victim Du Jour

    If they built IPhones in the State of Minnesota, an IPhone would cost $5,000.

    They should model an IPhone factory like the video game “the Simms” to show why Minnesota is such an expensive place to have a factory.

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