Tuesday, November 20, 2007

sale johnson

Johnson's ex-wife, Sale Johnson, wed her boyfriend, Ahmad Rashad, yesterday at La Grenouille in front of a crowd of friends including Princess Yasmin Aga Khan, NBA Commissioner David Stern, Donald Trump, Martha and Carl Lindner and Derek Jeter. "It was going to be a birthday party for him," Sale told us. "Then it turned into a party to celebrate his being inducted into the Football Hall of Fame, and finally he said, 'Let's just get married.' " One person not there: Sale's estranged daughter,Medtronic Profit Falls After Defibrillator Sales Slow (Update3)

By Emily Brown

Nov. 19 (Bloomberg) -- Medtronic Inc., the world's biggest maker of heart-rhythm devices, said second-quarter profit fell 2.2 percent as sales of its top-selling products, implantable defibrillators, slowed after the recall of a faulty part.

Net income declined to $666 million, or 58 cents a share, for the fiscal quarter ended Oct. 26, from $681 million, or 59 cents, a year earlier, the Minneapolis-based company said today in a statement. Profit missed the average estimate of analysts surveyed by Bloomberg by 1 cent a share.

Sales of Medtronic's defibrillators, or ICDs, used to shock stopped hearts back to normal, fell 16 percent, to $639 million. On Oct. 15, Medtronic halted sales of its Sprint Fidelis wires, used to connect the devices to the heart, after they were linked to five deaths. The recall was another setback for the $5.6 billion market for defibrillators, which shrank after Medtronic and competitors recalled products in 2005.

``The recall impact was less than expected, but when you adjust for that, ICD sales were still weak,'' said Jeff Jonas, an analyst at Gabelli Securities Inc. in Rye, New York, in an e- mailed interview today. ``I don't think it was as bad as many people feared.''

Costs from the recall, and its effect on sales, reduced second-quarter profit by 9 to 10 cents a share, Medtronic executives said on a conference call.

Medtronic shares fell 52 cents, or 1.1 percent, to $45.25 at 4:02 p.m. in New York Stock Exchange composite trading. The earnings were released after U.S. markets closed. The stock has dropped 15 percent this year.

Analyst Estimates

The company was expected to report net income of 59 cents a share, according to the average estimate of 18 analysts surveyed by Bloomberg. A Thomson Financial estimate, based on 27 analysts, was for earnings of 56 cents a share. The parameters of the Thomson number weren't clear. A total of 22 analysts polled by Bloomberg had made an average sales estimate of $3.09 billion.

The company's total sales rose 1.6 percent to $3.12 billion. Medtronic also reported inventory write-offs and other expenses of $31 million because of its recall. Medtronic said earlier that halting sales of the wires would lower the company's revenue by as much as $250 million.

``This was a tough quarter primarily due to our action surrounding Fidelis,'' said Chief Executive Officer William Hawkins in a call with investors and analysts today. ``Once we confirmed we had an issue with Fidelis we dealt with it. We are in challenging times.''

Mixing and Matching

The wires, called leads, may break or erode, according to Medtronic. The component delivers electrical jolts from the stopwatch-sized defibrillators implanted in the chest to regulate a faltering heartbeat. Leads cost $1,000 to $3,000 and can fail because of flexing and bending, according to Bruce Wilkoff, a cardiologist at the Cleveland Clinic.

The withdrawal of the leads hurt sales of the $30,000 defibrillators, especially in Japan, where the Sprint Fidelis is the only one of Medtronic's leads approved for sale, the company said. Doctors can mix and match different brands of approved leads and defibrillators, although they don't tend to do so in Japan, analysts say.

``The feedback that I have received from physicians is that they will be using less Medtronic and more St. Jude leads,'' Joanne Wuensch, an analyst at BMO Capital Markets in New York, said in Nov. 12 interview. St. Jude ``will take greater share, but of a smaller market.''


St. Jude Medical, based in St. Paul, Minnesota, and Natick, Massachusetts-based Boston Scientific Corp.'s Guidant unit follow Medtronic in defibrillator sales. About 300,000 defibrillators have been recalled by the three companies since 2005, after some of the devices were linked to deaths.

Medtronic also makes drug-coated stents, artificial spinal disks, devices that ease chronic disease symptoms by sending electrical pulses to the nervous system, continuous blood-sugar monitors for diabetics, and tools and hardware for orthopedic surgeons.

Sales grew 10 percent in the spinal division, 8 percent in the vascular division, 10 percent in the neurological unit and 16 percent in diabetes, the company reported.

Medtronic said in October it won European approval of its latest drug-coated stent, the Endeavor Resolute.

The company said it expects the U.S. Food and Drug Administration to approve an earlier version of Endeavor before the end of the year, putting it on the market ahead of Abbott Laboratories' Xience. Advisers to the FDA recommended Endeavor's approval last month.

Many doctors and researchers say Endeavor may offer a safer option. Medtronic is trying to differentiate Endeavor from the two approved drug-coated stents in the U.S., Boston Scientific's Taxus and Johnson & Johnson's Cypher, after they were linked to deadly blood clots. Sales of Taxus and Cypher plunged in the past year amid safety concerns.

To contact the reporter on this story: Emily Brown
Credit Suisse unit buying Deffenbaugh Industries
The Kansas City Star
Deffenbaugh Industries Inc., which grew from a one-truck trash hauling operation 50 years ago to become one of the biggest waste management companies in the Midwest, is being sold.

DLJ Merchant Banking Partners, a private-equity investment arm of financial services giant Credit Suisse, said Monday that it was buying the Shawnee-based company from founder Ronald Deffenbaugh for an undisclosed price.

Deffenbaugh Industries, with about 1,900 employees, serves 450,000 residential and commercial customers in Kansas, Missouri, Iowa and Nebraska. The company is one of the largest private employers in the Kansas City area.

Besides its waste hauling operations, the company owns the Johnson County Landfill, one of the biggest privately owned landfills in the country; recycling facilities; quarry operations; and Johnny on the Spot, a portable toilet business.

The sale is expected to close by the end of the year. Current management, including Mark Rosenau, Deffenbaugh president, will remain in place.

Although DLJ and Deffenbaugh officials declined to disclose the sale price, sources estimated it at between $300 million and $350 million, based on Deffenbaugh's estimated revenues and recent valuations of other waste management companies.

Ed Johnson, a managing director of DLJ Merchant Banking Partners, said he could neither confirm nor deny the figure.

Deffenbaugh, the son of a small trash hauler in Johnson County, founded Deffenbaugh Industries at the age of 16 when he put $25 down on a truck. He and his-then wife ― the two were teenagers when they eloped from Johnson County to Texas ― fixed up the side panels so trash wouldn't spill out, according to a 1992 story in The Kansas City Star about the couple's divorce proceedings.

By 1973, the Deffenbaughs decided to sell the company to Waste Management Inc., a huge nationwide operator, in exchange for Waste Management stock.

In 1976, they bought back Deffenbaugh Disposal, as the company was then called, relinquishing their Waste Management stock and paying $1.7 million.

The company continued to expand into other ventures, including motor oil recycling, sign making, rock crushing and even insurance to save money on premiums.

"Ron has built one heck of a legacy here," Rosenau said. "For 50 years, he's been picking up trash here in Kansas City and built a heck of a business, starting out with one truck when he was 16 years old. He built it into a 500-truck operation."

Deffenbaugh, now in his mid-60s, was paralyzed earlier this year in an accident at a local hospital that left him a quadriplegic. Deffenbaugh officials declined to talk about the accident, saying they wished to respect Deffenbaugh's privacy.

Rosenau said Deffenbaugh Industries' management approached DLJ about a sale of the company before Deffenbaugh's accident.

Deffenbaugh has retained local attorney James Bartimus to represent him. Reached Monday, Bartimus said he had no comment on the accident or about possible litigation.

The purchase is not DLJ's first venture into the waste management business. Most recently, in 2006 it bought a stake in United Site Services Inc. of Westborough, Mass., a provider of portable sanitation services. In 2005, it bought Wastequip of Beachwood, Ohio, a maker of equipment for the waste industry. It sold Wastequip earlier this year for more than $600 million.

"We look for companies with what we perceive to be exceptional growth opportunities and/or unique situations," Johnson, of DLJ, said. "Deffenbaugh qualifies on both counts here. And we look to do it in partnership with management. This met all of our investment criteria objectives."


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