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"When action grows unprofitable, gather information; when information grows unprofitable, sleep." -- Ursula LeGuin

BREAKFAST WITH THE FOOL
Medtronic's Quarterly Sales Pace Slows

By Brian Graney (TMF Panic)
August 22, 2000

Cardiovascular and surgical devices maker Medtronic (NYSE: MDT) reported earnings of $0.25 per share for the fiscal first quarter last night, up from $0.21 a year ago and in line with the First Call mean estimate. The results excluded a penny per share charge related to an unidentified arbitration judgment during the quarter.

Despite matching analysts' earnings estimates, the Minneapolis-based company's year-over-year sales growth slowed during the period. Sales rose 16% to $1.31 billion, down from a 26% rise the previous quarter. Some sell-side analysts had been calling for revenues as high as $1.38 billion for the most recent quarter, according to Bloomberg News.

Most notably, sales of implantable defibrillators grew at a 16% rate during the quarter, down from the 26% growth rate recorded in Q4 and the 23% rate posted in Q3. On a brighter note, the company's mainstay pacemaker business posted 8% sales growth during the period, in line with the average growth rate of the market in general over the past year or so. Meanwhile, neurological, spinal, and ear, nose, and throat (ENT) revenues rose 23% for the period, and coronary vascular product revenues jumped 41%, thanks in large part to a 72% surge in stent unit sales.

News to Go

Automaker Ford Motor Co. (NYSE: F) announced that it plans to shut down three of its truck assembly plants for a two-week stretch later this month in order to free up tires for an ongoing tire recall by Bridgestone Corp., which is affecting its Ford's Ranger pickups and Explorer SUVs. The temporary shutdown is expected to cut 25,000 trucks from the company's Q3 production schedule. "Clearly this will impact earnings," a Ford senior vice president told Reuters.

Tax and business services firm H&R Block (NYSE: HRB) reported a fiscal Q1 loss of $0.55 per share, which was not quite as bad as the loss of $0.57 per share expected by analysts surveyed by First Call. The company typically records losses in the first three quarters of its fiscal year due to the seasonality of its tax business. Revenues jumped 164% from a year ago to $321 million, thanks to the first-time inclusion of its H&R Block Financial Advisors and RSM McGladrey units.

E-business integration software provider Mercator Software (Nasdaq: MCTR) revised its previously reported earnings for the first half of 2000 to account for about $2.4 million in under-reported expenses. Revenues will be unaffected, but Q2 pro forma EPS has been reduced to $0.02 from $0.04 and Q1 EPS has been adjusted downward to $0.03 from $0.06. Additionally, the firm's CFO has resigned, its vice president of finance has been terminated, and its controller has been removed.

Digital music website operator MP3.com (Nasdaq: MPPP) announced that it has settled a copyright infringement suit with Sony's (NYSE: SNE) Music Entertainment division related to its My.MP3.com service. In addition to paying an undisclosed amount to Sony for "past acts," MP3.com has agreed to a non-exclusive, North American licensing deal to use Sony Music Entertainment-controlled recordings with the My.MP3.com system.

PC graphics chipmaker NVIDIA Corp. (Nasdaq: NVDA) posted fiscal Q2 EPS of $0.28, up from $0.09 a year ago and ahead of the First Call mean estimate of $0.26. Revenues jumped 118% from a year ago to $170.4 million.

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