Omar Ishrak, Medtronic's
Medtronic announced its fourth fiscal quarter results and guidance for the fiscal year that started May 1. Neither was particularly encouraging.
Revenue in the fourth fiscal quarter was flat on a constant currency basis. Sales of defibrillators dropped 16% on the same basis, but that was somewhat expected. This time last year, Medtronic and St. Jude Medical
On the bottom line, minus charges for the layoffs and the like, Medtronic was able to raise earnings per share slightly -- but that was only because share buybacks lowered the share count. Adjusted net earnings actually fell 2%.
Adjusted earnings are expected to grow 6% to 9% in the 2012 fiscal year, but that's mostly on the back of cost cutting. Revenue guidance was a paltry 1% to 3%. Keep in mind though, the guidance is likely a little cautious. Better to guide low and allow the new CEO, who starts next month, to raise guidance, than make him miss guidance right out of the gate.
The company pegs its growth to the growth of its overall market. Unfortunately there are only so many hearts and spines -- Medtronic's two largest units -- that need fixing. The company bought Ardian earlier this year for its revolutionary catheter system that treats high blood pressure by deactivating nerves around the kidneys. I like the expansion into new markets; its smaller units -- diabetes treatments, surgical technology, and neuromodulation devices -- all increased sales in the last fiscal year. Unfortunately, the growth in the smaller units is swamped out by the larger units.
Investors looking for a growth company in the devices realm should look at Intuitive Surgical
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Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Medtronic. Motley Fool newsletter services have recommended buying shares of Intuitive Surgical and Volcano. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.