graphic
News > Companies
B&L slides on 2Q results
July 19, 2000: 1:47 p.m. ET

Eyewear maker meets earnings estimates, but revenue is flat
By Staff Writer Martha Slud
graphic
graphic graphic
graphic
NEW YORK (CNNfn) - Eyewear maker Bausch & Lomb posted a 38 percent jump in second-quarter operating income Wednesday, matching Wall Street's expectations, but flat sales and jitters about a potential acquisition triggered a steep sell-off in the company's stock.

Bausch & Lomb shares fell 16-15/16, or 21 percent, to 61-7/8 in afternoon trading. Many Wall Street brokerages downgraded the stock, which had been trading at year-long highs before the quarterly results were released.

Bausch & Lomb  (BOL: Research, Estimates) earned $40 million, or 74 cents per diluted share, for the quarter ended June 24, excluding one-time items, up from $28.9 million, or 49 cents per share, for the year-earlier period. The latest per-share results matched the consensus estimate of analysts compiled by earnings tracker First Call.

graphicQuarterly revenue totaled $452.9 million, essentially unchanged from $453.3 million in the 1999 period.

The company said its new lines of disposable contact lenses performed strongly during the period, but sales of lens care and vision accessories declined due to U.S. market pressures.

The company reduced its sales outlook for the rest of the year.

U.S. market issues are expected "to impact our revenues for the balance of the year," CEO William M. Carpenter said. He said, however, that the company remains "comfortable" with current earnings expectations for the second half of 2000.

Industry analysts say many retailers are reducing their inventories of contact lens accessories, hurting the company's sales. They say the growing popularity of corrective eye surgery - which ends a consumer's need for glasses or contact lenses - also may be cutting into sales.

While the company was able to meet its quarterly profit targets through cost-cutting, the revenue results were sharply lower than anticipated, said S&P Equity analyst John Massey.

Revenue "didn't come anywhere close to meeting expectations," he said.

Meanwhile, the Rochester, N.Y.-based company also disclosed it is in talks to acquire an unidentified overseas drug maker focused on vision care. A deal could be announced by the end of July, the company said.

The combination of revenue pressures and a potential acquisition - which is expected to cut into earnings by as much as 25 cents per share in total over the next four quarters - is making many investors nervous, said McDonald Investments analyst Hans von der Luft.

Von der Luft cut his rating on the stock to "hold" from "buy," saying that the stock is now more reasonably priced.

"It basically was a sluggish top line report," he said. "I would call the stock appropriately valued at these levels."

Other brokerages also reduced their ratings. Deutsche Banc Alex. Brown cuts its rating to "buy" from "strong buy" and Lehman Brothers lowered its rating to "outperform" from "buy."

Net profit hurt by charges


Including one-time items, net income fell to $34.6 million, or 64 cents per diluted share, compared with $173.4 million, or $2.94 per share, a year earlier.

Net profit for the latest period was dragged down by a $3.7 million after-tax charge for the company's failed bid to acquire specialty lens manufacturer Wesley Jessen VisionCare Inc. (WJCO: Research, Estimates) and a $4.7 million settlement in a class-action lawsuit over the marketing and labeling of Bausch & Lomb contact lens solutions.

In conjunction with the earnings announcement, the company said Wednesday it has reached a tentative settlement of the 1995 lawsuit, which alleged that the company failed to disclose to consumers that its higher-priced contact lens solutions were chemically identical to cheaper products sold by the company with different names and for other uses.

The company denied wrongdoing in agreeing to the settlement.

The pact, which has received preliminary approval from a federal court in New York, would require the company to place coupons worth a total of $12 million inside its contact lens solutions products offering discounts on subsequent purchases. The company also would change its product labels and packaging.

Six-month results


For the first half of the year, Bausch & Lomb earned $73.8 million, or $1.32 per share, including special items, down from $195.8 million, or $3.34 per share, a year earlier. The 1999 period included an after-tax gain of $126.3 million from the sale of the company's sunglasses business.

Revenue for the six months rose 2 percent to $859.7 million. Back to top

  RELATED STORIES

Wesley Jessen finds white knight - May 30, 2000

Wesley rebuffs hostile bid - May 19, 2000

Bausch & Lomb eyes rival - March 23, 2000

  RELATED SITES

Bausch & Lomb


Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney




graphic


Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.