Medtronic’s first-quarter earnings fall as analysts wait it out

MINNEAPOLIS, Minnesota — Medical device-maker Medtronic reported a 38 percent decline in profits in its first quarter due in part to a $400 million legal settlement with Abbott Laboratories.

Medtronic’s net earnings in the first three months of fiscal year 2010 dropped to $445 million, or 40 cents a diluted share, compared to $723 million, or 64 cents a diluted share.

Revenues were up 6 percent to $3.9 billion, but so was the amount of time Medtronic could bring in sales. This quarter had 14 weeks, one more week than the previous first quarter.

Analysts had expected earnings of 78 cents a share, according to Thomson Reuters. But many are taking a long and positive view on Medtronic, in spite of the recent quarter’s results. Twenty-nine analysts have buy or hold ratings on the company despite its lawsuit troubles, intense competition and the lackluster performance of its cardiac defibrillators business, according to the Minneapolis Star Tribune.

Analysts said they are heartened by the company’s research and development efforts, its move toward a closed-loop diabetes device and its neuromodulation products. “Medtronic remains among the best-positioned medical technology companies under health care reform, given its focus on clinical and cost-effectiveness evidence,” the Star Tribune quoted William Blair & Co. analyst Ben Andrew telling investors.

Medtronic CEO Bill Hawkins in a statement called the company’s first-quarter performance “solid,” adding he was confident “our efforts to fuel innovation and develop a strong product pipeline positions us well for sustained growth during the remainder of the fiscal year and beyond.”

Revenue in Medtronic’s cardiac rhythm disease management segment grew by 3 percent, and revenue from spinal product was up 7 percent. The revenue results beat analysts’ expectations. They had predicted $3.82 billion in revenue, according to Thomson Reuters.