Merger costs weigh on Pfizer, Roche

Megamergers can be a drag ... on initial earnings, that is. Both Pfizer and Roche, which last year snapped up Wyeth and Genentech, respectively, saw their latest earnings suffer on expenses from those deals.

In Pfizer's case, however, the earnings growth it did post was due to cost-cutting, which presumably includes cuts related to the Wyeth buyout. The buyout was expected to lead to 19,500 cut jobs and various closures of manufacturing plants and R&D facilities. Some layoffs actually were announced during the fourth quarter. And Q4 earnings came in more than double the same period of 2008 because of one-time charges levied against last year's earnings--namely that $2.3 billion Bextra settlement. This year's adjusted results fell a penny short of Wall Street Journal analysts' estimates, two cents short at Bloomberg.

The actual numbers are these: Profits of $767 million or 10 cents a share for the quarter. Excluding charges, earnings dropped to 49 cents from 65 cents. Q4 revenue grew by 34 percent to $16.54 billion, partly on October's acquisition of Wyeth.

Meanwhile, at Roche, core EPS came in just under the Financial Times' quoted consensus of 12.33 Swiss francs. The company said profits fell by a fifth year-over-year, to 8.5 billion Swiss francs or $8 billion, because of costs related to its buyout of Genentech. Sales did grow, however, by 8 percent to 49.1 billion Swiss francs, or $46.5 billion. High demand for Tamiflu during the flu pandemic helped offset disappointing cancer-drug sales.

The Genentech deal appeared to start paying off in the second half of 2009, Bloomberg notes. Cost-streamlining after the takeover helped boost second-half profits by 11 percent year-over-year.

- read the WSJ piece
- see Bloomberg's take
- get more from AFP
- check out the FT story
- find the news at Reuters
- read another article at Bloomberg