Medical device giant Medtronic is planning to cut between 1,500 and 2,000 jobs. The announcement came as the company reported its FY 2011 Q3 financial results, during which it cut its full-year earnings forecast; Medtronic now expects fiscal year 2011 diluted earnings per share in the range of $3.38 to $3.40. The company's previously stated FY 2011 diluted EPS guidance of $3.38 to $3.44 didn't include the impact from the acquisition of Ardian.
In a statement, the company says in order to position itself for long-term sustainable growth, it will restructure its business. It will restructure through a combination of cost-saving measures, tighter expense management and voluntary programs to minimize layoffs. "Based on current expectations, the company intends to reduce its workforce by 4 to 5 percent, or 1,500 to 2,000 positions during Q4," Medtronic says. "The company also expects to recognize a one-time charge in Q4 related to this restructuring."
Medtronic employs 41,000 people worldwide, according to the Minneapolis-St. Paul Business Journal. But company spokesman Brian Henry said he didn't know which divisions or geographical regions would be affected by the cuts.
The proposed layoffs come as the company struggles with slow sales as a result of the global economic downturn and a stagnating share price, as Reuters notes. In addition, it is searching for a new CEO to replace Bill Hawkins, who steps down at the end of April.
"Everyone is focused on who the leadership is going to be," said Edward Jones analyst Aaron Vaughn to Reuters. "Until the new CEO comes in and articulates his plan, what we learned this morning is that the company is in the same straits it's been in for the last 24-36 months."
But Hawkins put a positive note on Tuesday's announcement, saying the company's newly launched products "are clearly capturing the interest of both physicians and patients." He touted the company's "industry-leading pipeline, bringing forward the Solera spinal system, introducing the novel Arctic Front Cryoballoon procedure for atrial fibrillation, launching the Endurant stent graft, and gaining FDA approval for the Revo MRI-compatible pacemaker."
The company reported worldwide revenue of $3.961 billion during the quarter versus $3.851 billion during the same period of 2010, an increase of 3 percent.