NEW YORK -- Pfizer reported quarterly revenue well below Wall Street expectations on falling sales of key brands and generic drugs, underscoring its interest in pursuing a $106 billion bid for rival AstraZeneca to promote new business growth.
Pfizer (PFE) said Monday it raised its bid last week in response to what it had heard from AstraZeneca (AZN) shareholders and believed it to be a "compelling" offer.
AstraZeneca quickly rejected the sweetened bid, saying it "substantially" undervalued the company, and on Monday it declined to comment on Pfizer's substantial revenue shortfall in the first quarter.
"We are very disappointed with their unwillingness to engage in conversations," Pfizer Chief Executive Officer Ian Read said of AstraZeneca's management.
Pfizer said total first-quarter revenue fell 9 percent to $11.35 billion, which was $730 million below Wall Street expectations. Revenue would have fallen 6 percent, if not for the stronger dollar, which lowers the value of sales outside the United States.
Pfizer shares fell 2.6 percent to $29.95 in midday trading.
To assuage concerns about potential layoffs of researchers in Britain, Pfizer vowed that 20 percent of the research and development workforce of a combined company would remain in the U.K. That created fears that U.S. researchers would bear the brunt of expected job cuts, especially those at its oncology research center in La Jolla, California.
%VIRTUAL-article-sponsoredlinks%Read, on a conference call with analysts Monday, said the company will maintain "a massive presence" of researchers in the United States, but didn't provide specifics.
The largest U.S. drugmaker earned $2.33 billion, or 36 cents a share, in the quarter. That compared with $2.75 billion, or 38 cents, in the year-earlier period, when the company reported gains from the transfer of product rights.
Excluding special items, Pfizer earned 57 cents a share. Analysts, on average, expected 55 cents, according to Thomson Reuters I/B/E/S.
"Definitely the results on the top line came in weaker than we were anticipating," said Morningstar analyst Damien Conover, who cited disappointing sales of generics outside the United States.
Pfizer's earnings ultimately met his expectations because the company was able to cut costs, Conover said.
Pfizer still expects 2014 adjusted earnings of $2.20 to $2.30 a share, but the forecast assumes that painkiller Celebrex won't face U.S. generic competition this year. Sales of the drug fell 4 percent to $624 million in the quarter, and could be jeopardized by ongoing U.S. patent battles in the United States.
Generics, Big Medicines Stumble
"What we're seeing is an unusually weak first quarter, but I'm not sure it will be reflective of the full year," said Richard Purkiss, an analyst with Atlantic Equities in London who noted the company didn't lower its full-year sales forecast.
Purkiss said a number Pfizer's key medicines, including Celebrex and impotence treatment Viagra "undershot" sales hopes in the quarter. Global sales of cholesterol fighter Lipitor, which is now facing cheaper U.S. generics, also disappointed.
Pfizer first approached AstraZeneca in January with an offer that valued AstraZeneca at 46.61 pounds a share. It made its second spurned approach on April 26, with an offer valued at 50 pounds ($84.34) a share.
If the merger goes through, it would be the largest acquisition of a British company by a foreign business. Under British takeover rules, Pfizer has until May 26 to announce a firm intention to make an offer or give up.
Sales in all three of Pfizer's operating segments declined from a year ago. Its established products unit, made up of hundreds of generic medicines and those about to lose patent protection, suffered the biggest fall with sales down 13 percent to $5.99 billion.
Pfizer provided detailed financial results for the three business units for the first time as a prelude to possibly divesting one or more of them by 2017.
Many analysts and investors hope Pfizer divests the established pharmaceuticals unit. It recently spun off its animal health and infant formula businesses in order to focus on the more lucrative patent-protected medicines. Proceeds from those deals also enabled Pfizer to aggressively buy back shares and boost its dividend.
Pfizer has said, however, it couldn't divest any of its units until 2017, after it has compiled three years of sales and earnings data for each.
In its earnings report, Pfizer said it still expected to buy back about $5 billion worth of its shares this year, with $1.7 billion already repurchased.
Sales at its Vaccines, Oncology and Consumer Healthcare unit fell by $20 million to $2.17 billion, while sales of global innovative pharmaceuticals, involving drugs that still have patent protection, fell 7 percent to $3.07 billion.
14 Money Mistakes to Avoid in 2014
Pfizer Sales Way Off Mark as Drugmaker Pursues AstraZeneca
Interest rates are low, but that's no excuse to accept 0.01 percent interest rates on your savings. Just a little shopping can find you many FDIC-insured savings accounts paying as much as 1 percent in interest, usually with no fees and easy availability to your money through electronic funds transfers. Compared to the near-zero rates that uninsured money-market mutual funds and other alternatives pay, high-interest savings accounts are a much safer way to save.
Banks still try to get customers to pay more for less, with one recent threat to charge fees for basic deposit accounts if the Federal Reserve cuts interest rates further. But many online banks not only offer fee-free options on their checking and savings accounts but also pay interest, and many have extensive fee-free ATM networks or reimbursement arrangements. If your bank follows through on threats to raise fees, taking your business elsewhere is your best move.
Bankrate reports that the average credit card charges around 16 percent in interest. That's a guaranteed money-maker for the banks that issue cards, but a big loser for those who carry balances on their cards. With many cards offering promotional interest rates as low as 0 percent, using them to get rid of high-interest cards is a no-brainer move and can help you pay your debt down faster.
Mistakes on your credit history can keep you from getting a loan that you want to buy your next home or car, but they can also have consequences you'd never imagine. Increasingly, insurance companies, apartment rental agents, and even prospective employers order copies of your credit report to see if you're financially responsible. Be sure to take advantage of your free credit check at the government's annualcreditreport.com website to make sure the three big credit-rating agencies have everything right before mistakes come back to bite you.
Payday loans have gotten more tightly regulated recently, but banks and other financial institutions still offer ways to let you get quicker access at your cash -- for a hefty fee. Resorting to short-term money fixes can land you in even more problematic situations down the road, because those solutions often create debt spirals from which it's hard to emerge unscathed. Set up an emergency fund instead and be prepared in advance for the money woes that life throws your way.
Interest rates have risen during the last half of 2013, with a typical 30-year mortgage carrying a 4.5 percent interest rate. But many homeowners still carry higher-interest mortgages from before the financial crisis. Now that home prices have risen, you might be able to refinance for the first time, and many homeowners have used lower rates to cut hundreds from their mortgage payment or shift to a shorter-term 15-year mortgage to pay off their debt faster.
Too many people never update their insurance coverage to deal with changes in their coverage needs, whether it comes from changes in family status for life insurance, health conditions for health-care or long-term care insurance, or even what types of property you own for homeowners' insurance. Don't wait for disaster to strike; check with your insurer or agent to see if your current coverage meets your needs.
In the past, investors had to pay hundreds or even thousands of dollars just to make a simple stock purchase. Now, though, the rise of discount brokers, low-fee index funds and exchange-traded funds, and freely available investment news and advice have made it silly to spend large amounts to get access to the financial markets. If you're still paying your broker too much to invest, look into alternatives that can help you avoid cutting serious money out of your retirement nest egg.
Everyone likes a tax break, and one of the best ones for you to use involves making contributions to a tax-favored retirement account. By putting money in an IRA or 401(k), you can reduce your current taxable income and save on your taxes while also preparing for the future. With 401(k)s, your employer might even chip in a bit on your behalf. Even when times are tough, finding even small amounts to save can put time on your side and make a big difference down the road.
Many investors found out the hard way this year that bonds aren't as safe as they thought, with some major bond funds posting double-digit percentage losses in 2013. Despite those losses, bonds still carry substantial risk in 2014, with many calling for imminent interest-rate hikes that would erode their value further. Even now, bond rates are so low that they don't compensate you much for their risk.
If you pay full price for just about anything these days, you're paying too much. The rise of deep-discount stores has led to falling prices at stores and shopping malls. Moreover, online tools like coupon sites, daily-deal offers, discounted gift cards, and cash-back credit-card deals can cut your costs as well. With all these tools, you won't find many situations in which you have no chance of getting a bargain on the items you want.
In the past, many young adults focused on getting into as strong a college as they could, figuring that their degree would pay them enough to make up for the costs they incurred. With college graduates facing a more challenging job environment than ever, smart students are thinking about college costs before they make a decision on a school. By maximizing financial aid and looking at lower-tuition schools with nearly as strong educational quality, you can avoid creating a big debt hole that you'll struggle with for years into the future.
If you don't have a will, a power of attorney for financial and health-care matters, and an advance directive to tell medical professionals whether you want certain life-preserving measures taken if something happens to you, then you're putting your family at risk. Many people don't have even these basic estate-planning documents, but getting them in place is easier and less expensive than most believe. Get your affairs taken care of in 2014 and save your loved ones some big future hassles.
Resolving to be more financially astute and to avoid common mistakes will help you get your finances in order more quickly. These tips should give you more money to help you meet all your financial goals.