November 20, 2008 / 5:05 PM / 10 years ago

UPDATE 2-Patterson Q2 profit trails Street; cuts FY09 outlook

* Cuts 2009 earnings outlook

* To freeze hiring, except sales force

* To freeze wages

* Q2 EPS, revenue trail Street

* Shares sink to 7-year low in morning trade (Adds analyst’s comments, CEO comments, updates share movement)

BANGALORE, Nov 20 (Reuters) - Medical equipment maker Patterson Cos Inc (PDCO.O) posted lower-than-expected quarterly profit, cut its 2009 earnings outlook and announced a freeze on its hiring and wages, citing a difficult economic environment.

Shares of the company sank 20 percent to a 7-year low in morning trade on Nasdaq.

The company now expects 2009 earnings of $1.73 to $1.77 a share, down from its prior view of $1.94 cents to $1.98 a share.

The move to freeze wages and hiring was not a major surprise considering the recent job cuts and cost cutting measures by Patterson’s major competitor Henry Schein Inc (HSIC.O), Robert W. Baird & Co analyst Jeff Johnson said.

Earlier this month, Henry Schein said it would cut about 300 jobs and that it planned to close several smaller facilities to reduce costs. [ID:nBNG355191]

“Given expectations for a continuation of weak economic conditions and the anticipated impact on Patterson’s sales growth, we are reducing our cost structure by at least an annualized $20 million to $25 million,” Chief Executive James Wiltz said in a statement.

The cost cutting measures include hiring freeze except for sales personnel and wage freezes throughout the company.

“The initial impact of this expense savings will be realized in the third quarter, and the full impact will be apparent in the fourth quarter,” Wiltz said.

Net income for the second quarter was $46.9 million, or 40 cents a share, compared with $53.7 million, or 39 cents a share, a year earlier.

Analysts were expecting a profit of 46 cents a share, excluding special items, according to Reuters Estimates.

For the quarter ended Oct. 25, sales rose 2 percent to $759.5 million, but fell significantly below analysts’ expectation of $800.7 million.

Shares of the St. Paul, Minnesota-based company were down $1.41 at $18.26 in midday trade. They hit a low of $15.75 earlier in the session.

For the alerts, please double click [ID:nWNAB5747] . (Reporting by Anand Basu in Bangalore; Editing by Amitha Rajan, Himani Sarkar)

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