Tom Reese/Paul Rubillo, Dividend.com
Pharma giant Merck & Co., Inc. (MRK) is announcing massive job cuts, as the company reported its third-quarter profits plunged 28 percent.
The company announced it will it will cut 7,200 jobs, nearly 13 percent of its work force, including many executives, in an effort to lower overhead and become more competitive. This marks the company's second major restructuring in less than three years.
The company has seen negative press lately from two studies that have hurt sales of Vytorin and Zetia, a cholesterol drug that is a component of the Vytorin combination pill. Vytorin sales were down 18 percent at $567 million for the quarter, while global Zetia sales were off 12 percent at $534 million.
The company's recently controversial cervical cancer vaccine Gardasil saw sales fall 4 percent to $401 million. Its diabetes drug Januvia was a standout during the quarter, as sales of the drug doubled, to $379 million for the quarter.
The company also reaffirmed its full-year EPS outlook of $3.28 per share.
The Bottom Line
We had removed the stock from our "Recommended" list back on July 21, when shares traded at $35.33. The company has a dividend yield of 5.07%, based on last night's closing stock price of $29.97. The company is trading at 9 times the low end of 2009 estimates. We are looking for drug pipeline news from the company and need to see something positive there, before getting big-time bullish on the shares.
Merck (MRKK) is not recommended at this time, holding a Dividend.com Rating of 3.3 out of 5 stars.
Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.
Related Stories
