Bulls and bears alike had something to love about
Pfizer 's (NYSE: PFE) earnings today.
The good news: Pfizer beat
analysts' expectationsfor both revenue and adjusted
earnings, even if only by a little.
The bad news: Revenue was still lower than the year-ago
quarter, and adjusted earnings per share were way down --
$0.51, compared to $0.62 in the third quarter last year.
Don't be fooled by the "profit jumps 26%" headlines. That
figure represents
GAAPearnings compared to the year-ago
quarter, and it included an insane number of one-time
charges, including a $900 million lawsuit settlement.
Of course, the company has an excuse. Revenue was
essentially flat if you ignore currency changes and product
returns. That metric doesn't exactly scream, "Buy me," but at
least it's not headed in the wrong direction. Pfizer's more
like
Johnson & Johnson (NYSE: JNJ) or
Baxter International (NYSE: BAX) --
hanging onfor better days -- than
Abbott Labs (NYSE: ABT), which
grew saleseven in the face of negative currency
impacts.
On the expenses side of the equation, Pfizer's
cost-cutting measures seem to be working. The company managed
a 6% reduction in adjusted selling, informational, and
administrative expenses -- SI&A? -- while spending on
research and development was cut by 8% after adjustments.
But the cost-cutting couldn't save the company's adjusted
earnings from a year-over-year decline. You can blame that
one on Wyeth.
"But the company didn't
close its acquisitionuntil after the third quarter
ended," you say? True. But the preparation for the
acquisition, including increasing its interest payments, and
paying higher taxes as a result of various decisions on
financing the Wyeth purchase, killed this quarter's
earnings.
Expect a lot more of the blame-Wyeth game in the quarters
to come.
Is Pfizer a value or a value trap as it integrates
Wyeth? Let us know in the comments below.
This article was originally published as
Pfizer Starts the Blame Gameon
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