Wall Street is definitely a what-will-you-do-for-me-tomorrow kind of place. Yesterday is done, and investors are correctly looking forward to tomorrow. But for Zimmer
The medical-devices company turned in fourth-quarter earnings of $1 per share, after adjusting for charges such as its acquisition of Abbott Labs'
The culprit? Investors weren't impressed with the company's guidance. Actually, from the look of things, they hated it.
Revenue is expected to grow just 1% to 3% this year in constant currencies. But more than 40% of sales come from abroad, and today's stronger dollar will result in a 4% drag on revenue, if the exchange rate holds steady. That should wipe out all of the company's growth guidance, so it looks like revenue will actually fall in 2009.
Zimmer isn't the only one caught in a trap of a rising dollar -- fellow orthopaedic implant maker Stryker
That drag on the top line will hurt Zimmer's earnings this year. Its guidance of $3.85 to $4.00 per share trails the $4.05 per share in adjusted earnings that it managed last year.
The good news is that the headwind should eventually end -- hopefully sooner, rather than later. In the meantime, investors in these companies need to keep a weather eye out.
Let us know what you think in Motley Fool CAPS. Make an outperform or underperform call on these companies; post a pitch about whether you think Zimmer can make a comeback. It's free. It's fun. And, it's Foolish.
Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Johnson & Johnson is a Motley Fool Income Investor recommendation, and the Fool owns shares of Stryker. The Fool has a disclosure policy.