Market briefing---Lane (medium)
Focus on Lilly--Matt (slow)
Drugmakers---Su (fast)
NYSE---Deb (fast)
Trial---Allan(slow)
>> welcome to “world financial report.” i’m lane bajardi in new york. well, a day marked by falling drug stocks results just out from eli lilly looks set to counter that trend. this is evidents by the fourth largest u.s. pharmaceutical company to diversify its once prozac-laiden portfolio, continue to reap results. stronger than expected gains being forecast for the rest of the year. matt nesto has been analyzing lilly’s numbers and join us with the latest.
>> not a lot of trade in the afterhours, but lilly caught up in the downward spiral of drug stocks today. let’s take a look at the numbers. that is, of course, going to be the most important thing. the third quarter profit up about 4.5% from a year ago, 66 cents a share, that’s up from 63 a year ago t. operating profit right in line with the thomson financial estimate of 66 cents. you’ll see that would be down, actually 3% from an adjusted figure a year ago. the revenue figure for the third quarter also impressive, up 12.7% to $3.14 billion. interestingly, their top-selling drug continues to increase its leadership and dominance schizophrenia drug zyproxa t. sales there $1.12 billion. they were up 16% for the quarter, up 16% for the nine months or year-to-date periods and account for almost two thirds of total revenues. now we go to the forecast. eli lilly for the full year looking for 67 cents―excuse me, that is for the fourth quarter. that is verses a 66-cent estimate from thomson financial. the company saying they’re looking for low double-digit sales growth, especially expecting the approval of their cealis drug coming in the next few months, competing with pfizer’s viagra and they expect to launch seven or eight new products. the c.e.o. told us a few minutes ago that they’re not too worried about their patent protection because most of their drugs still have years of coverage.
>> the problem, which is behind us with the prozac expiration which occurred in 2001, we have no major patent expiration occurring until the end of the decades and with all the new products that we have, we’re expecting a very good era of growth in front of us. >> if you take a look at eli lilly shares, of course, they were down today and year-to-date, they have been an underperformer compared to the market. you see that 2.75% decrease for the day. year-to-date, as i said, down about 4% f. you take a look at the bloomberg verses, for example, the s&p 500 at 17%, that’s the green line. red line is the amex drug index. that itself is up about 2.5% and lilly a laggard. in fact, it is the fifth worst performer out of the 15 members in that d.r.g. index, drug index on the amex. there you have it. eli lilly results for the third quarter and the fourth quarter forecast. back to you.
>> all right. matt nesto. earlier in the trading day, five other drugmakers with half a trillion dollars in combined market value reported earnings. only one, glaxosmithkline, said net income actually rose here. merck announced it will the cut more than 4,000 jocks as sales of its top drugs fell. su keenan is here with the details. su?
>> let’s start with merck, the nation’s second largest drug company t. c.e.o. said he is cutting his work force by 7% as the company’s top drugs face more competition. shares of one of the most actively traded today, plunging to a new low for the year, as you can see, closing down almost 7%. he said it will take a charge of as much as $900 million for the cuts in the fourth quarter. the cost will impact profit from continuing operations by four to six cents a share. now merck’s net income fell 1.4% as sales of its painkiller, vioxx, plunged. kris jener manages more than $800 nl assets for t row price.
>> i think merck is acknowledging what we have known for some time is that things are very tight there. many of their very significant drugs that they were hoping would be much bigger in terms of revenue generation now are actually smaller, and i’m specifically refering to vioxx. you know, they’re in a tough situation.
>> to the numbers now. merck’s net income fell 1.86 billion dollars or 82 cents a share, on an operating bass, that’s two cents short of the average analyst estimate. revenue rose 6%, but sales of its top-selling cholesterol drug fell in the quarter. on to pfizer now t industry leader. it said profit dropped 4.9% on costs related to its purchase of pharmacia. revenue jumped on sales of drugs, gained in that acquisition. for instance, demand for pharmacia painkiller celebrex helped boost sales by 56% to $12.5 billion.
>> we actually think that this might be the quarter that starts to turn the tide in sentiment for pfizer, in that they had a nice quarter here. revenues beatations and if we can get some sustainably good news out of the pipeline, i think this is an undervalued stock that can start to make steady progress over the next 12 months.
>> while schering-plough and wyeth, reporting today as well, posted losses as they set aside money for lawsuits. wyeth makes advil products among others. shares of both exains fell 5.5% and glaxo, europe’s biggest drugmaker said third quarter net income rose 49%. lane?
>> su keenan. now the market posted its worst loss in a month. as we just heard, merck’s earnings were a major part of that picture. deborah kostroun is at the new york stock exchange on today’s numbers.
>> lane, as su was just mentioning, the drug stocks , that was the biggest drag on the s&p 500. merck also closing at a 52-week low in today’s session and obviously other drug stocks down as well on their earnings and likely to see that continue as we do have lilly earnings as well. we’ll have a lot more focus on drug stocks as well tomorrow. in addition t market faltering as with the biggest drop in about a month. and, in fact, some of those earnings coming out a little bit worse than expected or at least according to steven lampy, he helps manage $7 billion at delaware investment and that’s about $7 billion and he says they were worried about problems going forward, but now they’re more concerned about problems in the present. so he says looking at things probably a little bit worse than expected, not only for merck, but for many other companys that reported their earnings today t. converges some of those. also, tenet. in addition, tech valuations getting very high. a lot of concern that getting very toppy right now. and, in fact, william batchellor helps manage $20 billion in cleveland, he says they are cautious because of those valuations. he says stocks have moved a lot and are not cheap right now. also, gold rallies to its best level in a month. interesting that we had our biggest drop in a month and gold seeing that reverse, an inverse relationship. so, gold is rallying about $4.80 in today’s session. talking about some of those other earnings woes that weighed on thing. convergence having its biggest drop in the same and saying their 2004 profit will miss. tenet health care third quarter numbers missed estimates because patients not maying and maxtor seeing their third quarter earnings weak as well. back to you.
>> deborah kostroun at the big board. the jury deciding the fate of ex-credit suisse first boston banker frank quattrone has concluded their deliberations for the day and the case has taken a twist. the 11-person panel remain deadlock in what the judge classified as substantial disagreement on the verdict. but the judge tried to change that today. alan frank join us now with the latest. alan?
>> lane, judge richard owen ended the day of day four of deliberations by instructing the jury to get a good night’s sleep. and he instructed them to break a dead lock in a jury, but reminding them of their civic duty, of the expense that a second trial would cost, of how difficult it would be for another jury to reach any different decision and by urging them to go back and reconsider, thinking about being a unanimous jury, as long as they didn’t vie late their own conscience or integrity. now after that instruction, the jury sent out notes five different times today, asking for clarifications for exhibits, for e-mails, and by the end of the day, the judge had told them, once again, what the elements of the crimes, the three charges against frank quattrone are and exactly what they have to find to render a verdict, guilty or innocent. so, lane, we’re looking forward to a start tomorrow at 10:00 and the jury will be back for day five. still split.
>> and you’ll be there to cover it for us.
>> i will.
>> alan dodd frank. thank you. chilly weather in the spring could benefit for retailers. we’ll get the forecast on what we can expect for the weather the next couple of months and how will it affect shopping? stay with us.
