Earnings: Merck, 3M, HCA, Caterpillar

Earnings: Merck | 3M | HCA | Caterpillar |

Merck Posts 34 Percent Decline In Profit

WHITEHOUSE STATION, N.J. - (AP) - Drugmaker Merck & Co. (MRK) on Friday posted a 34 percent drop in third-quarter net income due to flat sales, restructuring costs and higher overhead, including increased marketing costs for recently approved products.

The struggling pharmaceutical company also said it is adding an additional $598 million to its reserves for future legal defense costs over its withdrawn painkiller Vioxx.

Merck had previously reserved a total of $970 million for Vioxx defense costs since pulling the one-time blockbuster from the market on Sept. 30, 2004.

Its shares were down 49 cents at $44.00 in premarket trading.

Merck, the maker of osteoporosis treatment Fosamax as well as Singulair for asthma and allergies, reported net income of $941 million, or 43 cents per share. A year earlier, it had net income of $1.42 billion, or 65 cents per share.

Excluding a charge of 8 cents per share for restructuring costs such as site closures and severance, net income would have equaled 51 cents per share.

Revenue totaled $5.41 billion, little changed from the $5.42 billion in 2005's third quarter.

The profits beat by a penny the consensus forecast of analysts surveyed by Thomson Financial, who were expecting earnings per share of 50 cents, excluding one-time items. They projected revenue at $4.97 billion.

Merck said it eliminated about 500 jobs in the third quarter, for a total of about 3,900 job cuts since it announced a massive restructuring last fall. The company plans to cut 7,000 jobs in all by the end of 2008.

For the first nine months of 2006, net income was $3.96 billion, or $1.81 per share, up nearly 13 percent from $3.51 billion, or $1.59 per share, for the first nine months of last year. Revenue totaled $16.6 billion, up 2 percent from $16.2 billion a year earlier.

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3M Profit Rises

MINNEAPOLIS - 3M Co. (MMM), maker of Scotch tape and furnace filters, said on Friday that its third-quarter profit rose 6.4 percent as its business making films for LCD television and computer screens rebounded.

3M said it earned $894 million, or $1.18 per share, during the quarter that ended Sept. 30, up from $840 million, or $1.08 per share, during the same period last year.

Revenue rose 8.8 percent to $5.86 billion, from $5.38 billion during the same period last year.

Analysts surveyed by Thomson Financial had predicted earnings of $1.12 per share on revenue of $5.76 billion.

3M said it expects to earn $1.10 to $1.16 per share during the fourth quarter, excluding 12 to 13 cents per share for acquisition costs. Analysts are expecting $1.13 per share.

The results followed a disappointing second quarter, when 3M suffered from weaker sales of LCD televisions. The company makes film coatings for those screens.

Chairman and Chief Executive George Buckley said growth in the LCD film business accelerated in the third quarter as consumers bought more televisions. He said the company also improved its manufacturing process — a new production line had been causing problems — "and the new production line is now behaving in line with our expectations."

3M shares climbed $1.70, or 2.2 percent, to $78.10 in premarket trading.

Hca Reports Lower 3Q Profit

CHICAGO (Reuters) - HCA Inc. (HCA), the biggest U.S. hospital company, on Friday posted lower third-quarter profit, weighed down by charges and the costs of treating the rising numbers of patients without health insurance.

Earnings fell to $240 million or 58 cents per share, from $280 million or 62 cents per share, a year earlier.

Results include several charges, including those involving stock option expenses, merger-related costs and weather.

HCA is in the midst of a $21 billion leveraged buyout by private equity groups, which the company expects to close in the fourth quarter.

Revenue rose to $6.2 billion from $6 billion.

Doubtful accounts, or "bad debt," including discounts for the uninsured, rose to 14.7 percent of revenue from 13.7 percent a year earlier.

The rising toll of unpaid medical bills has been dragging on hospitals' profits in recent years and is taking up a bigger chunk of revenue.

Bad debt is rising as the number of people without health insurance climbs. About 46 million people lack medical insurance in the United States.

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Caterpillar Earnings Rise, But Miss Views

CHICAGO (Reuters) - Heavy equipment maker Caterpillar Inc. (CAT) said on Friday that earnings in the latest quarter rose, but results fell short of analysts' expectations as the growth of its lucrative mining sales slowed, and its shares sank as much as 8 percent in premarket electronic trading.

The company forecast that 2007 revenue could be flat to up only 5 percent, overshadowing strong sales in the third quarter as trucking companies scrambled to update fleets ahead of tough new emissions rules.

The company reported a third-quarter profit of $769 million, or $1.14 a share, compared with $667 million, or 94 cents a share, a year earlier. Sales rose 17 percent to $10.52 billion.

Analysts, on average, expected the Peoria, Illinois-based company to report earnings of $1.35 a share on sales of $9.65 billion, according to Reuters Estimates.

The company also revised its sales expectation for 2006 slightly lower, blaming a charge related to third-quarter legal disputes, higher core operating costs and slightly lower sales volume.

In early electronic composite trading shares of the company slid to $63.56, down from a close of $69.02 on the New York Stock Exchange on Thursday.

Looking forward, Caterpillar forecast a "pause " in U.S. economic growth that it said would create short-term headwinds for the company.

"We're expecting slightly higher sales and revenues in 2007 despite the prospects of a slowing U.S. economy, a sharp drop in sales of on-highway truck engines and weaker housing construction," Jim Owens, the company's chairman and chief executive, said in a statement.

"While next year will likely be a year of slower corporate growth, the fundamentals for key global industries we serve are strong, and after the 2007 pause, we expect continued solid growth through the end of the decade."

The company, which has been enjoying strong sales as mining companies have scrambled to take advantage of high commodity prices, said that while mining activity continued to be strong in the third quarter, "new product introductions and mine permit delays in the U.S. slowed growth in large machine sales."

Through Thursday, Caterpillar shares had risen about 20 percent so far this year, outperforming peers on the S&P Capital Goods subindex, which has risen about 14 percent.

The company trades at about 11 times estimated 2007 earnings, a discount to the index, which trades at 15 times the estimated 2007 earnings of its 35 members.

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