Friday, July 30, 2010

Merck Tightens 2010 Guidance Range -- SLASHES GAAP Range

Merck's Q2 2010 earnings are out -- and Whitehouse Station has tightened its 2010 guidance range for EPS, raising the bottom by two cents, and lowering the top by two cents, on a non-GAAP basis.

The real story though, is that it has slashed the GAAP EPS range -- now $0.82 to $1.16 for the full year. As recently as June 2, 2010 (a PDF file), this was Merck's 2010 guidance -- so, the lowering reflects additional GAAP down-bubbles since June 2:

. . . .As of June 2, 2010, the company reconfirms its full year 2010 guidance non-GAAP EPS range of $3.27 to $3.41, excluding certain items and 2010 GAAP EPS range of $1.15 to $1.50. The company also reconfirms its long-term target high single digit non-GAAP EPS compound annual growth rate from 2009 to 2013. . . .

Wild. Literally. The BOTTOM, on a GAAP basis, as of June 2, 2010 is now the top.

Merck is now off $0.86 in NASDAQ moderate volume premarket trading.

Seamus Fernadez of Leerink, Swann now says that Merck has reported in-line (no $0.03 EPS "beat") Q2 results this morning -- when the company's lower than expected tax rate is excluded -- he's clearly disappointed. He had been particularly bullish before this morning.

Sales are weaker than earlier expected, globally -- just as they were at J&J, ten days ago -- there's your driver.


Anonymous said...

This can't be good news for Whitehouse Station:

Anonymous said...

also give a nod to ed over on pharmalot....

Anonymous said...

It appears Merck failed to get approval from the Organon Biosciences NV Supervisory Board for the job cuts, a legal obligation due to the size and structure of the legal entity still in place.
As major shareholder Merck can of course fire the board but they in turn can (and probably will) appeal that in court, case law does exist as a multinational had to rescind a decision to relocate labour to the UK.
Merck might just have to be prepared to present a solid business case in order to be allowed to relocate the work to the US, where lower cost will not be a likely way out.
Interesting to see how this piece of info will be spun as I believe it was already announced that they are on track with cost cuts....

Reductions will not be avoided but a serious delay is quite likely.

condor said...

Thanks Anon.!

I just made yours, above, a new post. Do go take a look.

Thank you very much, and do stop back.