At least we could see it coming.
Since Medtronic's (NYSE: MDT ) fiscal calendar is a month behind fellow medical-device makers Johnson & Johnson (NYSE: JNJ ) , Boston Scientific (NYSE: BSX ) , St. Jude Medical (NYSE: STJ ) , and Intuitive Surgical (Nasdaq: ISRG ) , it wasn't a big shock to find out that Medtronic expects weaker demand for medical devices. The rest said the same thing a month ago.
It comes down to being able to afford the procedures, which in many cases can be postponed for months without an immediate effect on the patient's health. The high unemployment rate has translated into a larger number of uninsured people, and even those who have insurance may not have the money to shell out for a large copayment.
Medtronic beat analysts' estimates by $0.01, but earnings were helped by lower taxes. It was a generally weak quarter, with revenue up a measly 2%. Sales in Medtronic's largest segments -- cardiac rhythm and spine -- actually fell year over year.
Things aren't expected to improve anytime soon. Management decreased its forecast for the fiscal year, which ends in April, to a range of $3.38 to $3.44 a share, down from $3.40 to $3.48.
The good news for Medtronic and the rest of the industry is that these medical conditions aren't going to cure themselves. Sure, they may lose a few patients -- a sad but realistic possibility of waiting to get something like a pacemaker -- but a vast majority of the patients will eventually get their procedures once the economy picks back up.
Investors willing to be patient and use time arbitrage to their advantage should be able to benefit from the pent-up demand.