For the third quarter, Abbott Laboratories ($ABT) raised profits on lower sales. Margins saved the day. Now, the company is cutting more jobs--a total of 550 from several business units--a move designed to shave costs as it prepares to split into two separate operations.
Some 180 jobs are expected to disappear in Sligo, Ireland, where Abbott operates a nutrition plant. Medical devices and diagnostics will also suffer cuts. On the drug side, the layoffs are focused on established pharmaceuticals, a unit that sells off-patent drugs overseas. That unit suffered a 7.3% sales decline last quarter.
The latest job-cutting plans follow layoffs announced earlier this year. The company said in January it would shed 700 jobs. According to PharmaTimes, "several hundred" more job cuts are to come in 2013. But next year, of course, Abbott's drug business will be a standalone company, AbbVie. Abbott's plans to spin off the pharma side are expected to come to fruition Jan. 1.
Abbott revealed some updated figures on the soon-to-be-independent AbbVie during its earnings call Wednedsay. As the Chicago Tribune reports, the spinoff's sales are expected to be a bit more than $18 billion next year, with revenues flat or down slightly through 2015. The company's expected tax rate of 22% is 10 percentage points higher than previously estimated. That's because of dividend plans, which will require AbbVie to repatriate foreign cash.
Meanwhile, AbbVie's putative CEO, Richard Gonzalez, spoke to the recent flap over his inflated resume, included in public filings for at least six years, the Tribune notes. "Does he have the confidence of investors?" Barclays analyst Tony Butler told the Tribune. "Let's just see how AbbVie performs in the post-spin world. He has lots of wood to chop."
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