Flying The Unfriendly Skies and AstraZeneca Dips On Q4, Layoff News

The International Air Transport Association last Wednesday said airlines suffered the largest-ever decline in passenger demand in 2009, down 3.5% despite a 4.5% year-over-year jump in December traffic.

Passenger revenue among leading U.S. airlines fell 4% in December vs. the same month a year ago, the 14th consecutive monthly decline, according to the Air Transport Association of America. For the year, U.S. passenger revenue declined 18%, the biggest drop on record, exceeding the 14% decline in 2001.

That plunge stemmed from a 6% decline in passengers and a 13% decline in the average price paid to fly one mile.

Airlines aren’t out of the clouds just yet, but the outlook is brighter. [Read the full article]

On Thursday AstraZeneca said it will axe 8,000 more jobs worldwide by 2014, extending a cost-cutting effort that includes slashing more than 12,000 jobs since 2007.

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Also Thursday, AstraZeneca said its earned $1.42 a share during the fourth quarter. That was up 14% from the prior year but below the $1.52-per-share profit forecast by Thomson Reuters analysts. Revenue gained 9% to $8.9 billion.

AstraZeneca predicts a tough 2010 because a number of its key drugs’ patents are due to expire. Pharmaceutical companies usually face fierce competition from generic-drug makers when they lose patents to produce key drugs.

“Let’s be clear — 2010 is going to be a challenging year,” Chief Executive David Brennan said in a statement.

The drugmaker plans to cut another 10,400 positions, or 16% of its work force, by ’14. AstraZeneca’s (AZN) Q4 net profit rose 24% to $1.55 bil, below views. Sales rose 4% to $8.95 bil, above views. AstraZeneca expects ’10 EPS of $5.75-$6.15 vs. [Read the full article]

IBD’s medical equipment group, which features 76 stocks, is up more than 15% the past three months. The group has risen more than 60% over the past 12 months. The standout is Intuitive Surgical (ISRG).

Intuitive makes the da Vinci robotic system for minimally invasive surgery. It sold 110 units in the last quarter, 80 of them to U.S. customers. Analysts had predicted 95 units.

Overall fourth-quarter sales climbed 40% from the previous year to $323 million. Earnings gained 54% to $1.95 a share, beating Wall Street views by 24 cents.

Business also has been strong at Varian Medical Systems (VAR), which makes imaging and radiation equipment to treat cancer.

The company has run off five straight quarters of double-digit earnings growth. Shares are up 26% the past four months.

Last week Varian posted fiscal first-quarter earnings of 63 cents a share, up 12% from a year earlier and 7 cents above Thomson Reuters views. [Read the full article]

Sounds impressive. But that’s largely due to a big recovery from the economic and credit market meltdown at the end of 2008.

Banks swung to profits after suffering massive losses at the peak of the crisis. Excluding financials, the S&P 500 should report more-modest but still solid 15% growth, according to Thomson Reuters.

Results are in from 220 of the S&P 500 firms. A very high 78% have topped Q4 EPS views. Two-thirds have beaten sales targets.

S&P 500 revenue likely rose just 7% in Q4, or 2% excluding financials. But after several quarters of layoffs and other cost cuts, even a modest demand pickup can fuel big bottom-line gains.

Earnings likely more than doubled for the consumer discretionary sector, including battered auto-related firms. Materials companies’ profits will nearly triple.

Meantime, health care and industrials are on track for single-digit profit drops. Medical firms saw relatively steady profits in the recession compared to other sectors. [Read the full article]

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