Abbott to cut 1,900 jobs

(AP) — Abbott Laboratories said Wednesday it would eliminate 1,900 employees to keep profits up, indicating that one of the pharmaceutical industry's few success stories of recent years is not immune to cost pressures squeezing the sector.

The maker of drugs and devices said the terminations involve U.S. marketing and manufacturing positions. The cuts, which represent about 2 percent of the company's work force, are expected to save the company $300 million in coming years. Abbott blamed the cuts on new fees and pricing pressures associated with the health reform law and a "challenging regulatory environment" at the Food and Drug Administration, which approves new drugs.

Abbott has steadily increased its revenue year after year, even as most of its pharmaceutical peers have watched sales fall as patents on blockbuster drugs expire. And while the company's multibillion dollar, anti-inflammatory drug Humira continued to deliver in the latest quarter, Abbott has stumbled in efforts to develop new therapies.

Last week the company halted research on a next-generation psoriasis drug after the FDA indicated additional clinical trials would be needed to win approval.

The company has also wrestled with high profile safety problems in the past year. It pulled its diet drug Meridia from the market in October because of heart risks, only one month after it recalled millions of containers of its best-selling Similac baby formula because of possible contamination from insect parts.

Abbott shares fell 93 cents to $47.03 in morning trading while the broader markets edged higher.

Despite these and other challenges, the company continued to deliver double-digit earnings and profit growth in the fourth quarter, meeting Wall Street's expectations.

Looking ahead to 2011, the company predicted earnings growth between 9 and 11 percent, just below analyst expectations. Abbott expects profit between $4.54 and $4.64 per share in 2011, while analysts expect $4.64 per share.

But Leerink Swann analyst Rick Wise said both those figures may be conservative.

"In 2011, Abbott could begin to realize more fully the benefits of the ongoing Solvay integration with potentially even more operating synergies than currently reflected in Street estimates and guidance," Wise stated in an investment note.

Abbott, based in North Chicago, Ill., earned $1.4 billion, or 92 cents per share, in the fourth quarter, down from $1.54 billion, or 98 cents per share, a year earlier. Excluding costs related to the acquisition of Solvay Pharmaceuticals and Piramel Healthcare Solutions, along with a partnership, Abbott said it earned $1.30 per share. Revenue rose 13 percent to $9.97 billion.

Analysts polled by FactSet expected profit of $1.30 per share on $9.87 billion in revenue.

Pharmaceutical sales drove revenue during the quarter, rising 23 percent to $5.94 billion. The company's rheumatoid arthritis and immune disorder drug Humira led the way with a 15.4 percent boost in sales to $1.88 billion.

Meanwhile, nutritional product sales fell 1 percent to $1.43 billion while diagnostic product sales rose 5 percent to $1.02 billion and vascular product sales rose 14 percent to $822 million.

For the full year, the company earned $4.63 billion, or $2.96 per share, down from $5.75 billion, or $3.69 per share, in 2009. Revenue rose 14 percent to $35.17 billion from $30.77 billion.

Ally Financial Revs Up Hiring

Ally Financial, the lender formerly known as GMAC, is stripped down and posting hundreds of job openings after a major retooling precipitated by the crisis.

The Detroit-based firm, which became a stand-alone bank in late 2008, is angling for a bigger share of the auto finance market and has a new online banking platform offering checking accounts and a range of CD products. The firm is slowly building out both units in advance of a hoped for initial public offering next year, according to Ally spokeswoman Gina Proia.

"Over the past few years, there's been a number of changes, not the least of which has been transitioning from a captive organization to a market-driven organization," Proia said. "In short, we're continuing to add the talent and capability where we need it."

Like many of the Detroit-built cars that it financed over the years, Ally used to be much bigger and less efficient. In 2009, it trimmed 17% of its workforce as it sold some units in Europe and laid off employees in the U.S.

At the end of 2009, Ally had 18,800 employees.

The bank declined to provide a more recent headcount; however, there were 214 jobs openings listed on its Web site this week, including 25 postings in risk management and a number of financial analyst positions in Detroit.

"It's more just an effort to streamline overall and look at ways to be more efficient," Proia said. "It's about focusing on our key markets and our key lines of business."

The company is trying to gain market share with car dealers that sell its financing to customers. It also hopes to gain market share among young car-buyers.

Ally has been boosted by resurgent auto sales. In the most recent quarter, it lent $8.3 billion to U.S. car-buyers, a 48% increase over the year-earlier period. And the firm recently inked agreements to provide financing for U.S. Fiat sales and Chrysler dealers buying vehicles wholesale.

Ally returned to the unsecured bond market in February and sold almost $1 billion in asset-backed debt last month. The company hopes to sell shares to the public next year in order to repay roughly $17 billion in federal bailout money.

GM, however, recently bought AmeriCredit Corp., effectively giving it an in-house financing option. Ally financed a little more than one-third of GM vehicle sales in recent months.

PwC Hiring 10,000 in Asia by 2016

Accounting giant PricewaterhouseCoopers is looking to meet the increased Asian demand for financial services pros by adding 10,000 new jobs in the region over the next five years. The new hires are set to join PwC's 10,000 employees already based in mainland China and Hong Kong, where portions of its advisory and consulting businesses are based.

PwC's current Asian operations include advising and consulting practices for M&A, corporate finance and restructuring, and financial due diligence. The growth will be centralized in the firm's advisory arm. Specifically, the firm will add 2,000 fresh graduates to their Asia-Pacific ranks in 2011, and will more than double its headcount in its Guangzhou, China, location, bringing in 650 staffers to fill its newly expanded downtown office space.

Barclays Capital Plans Layoffs

Barclays Capital, the investment-banking unit of Barclays PLC, will announce plans to lay off several-hundred back-office staff as early as Wednesday, according to a person familiar with the matter.

The job cuts come following Barclays' expansion of its investment-banking unit, spurred by the London-based bank's purchase of Lehman Brothers Holdings Inc.'s North America operations in September 2008.

Barclays has increased its head count by several thousand in the past year, to 25,500, and cuts could raise questions about timing of the build-out.

Market activity slowed in the second quarter, affecting all investment banks. At Barclays Capital, revenue fell 15% in the second quarter from the first quarter and its cost-to-net-income ratio rose to 69% from 57% in the first quarter.

The person close to the matter said the back-office cuts are routine, and Barclays will continue to hire people for roles in the investment bank through the end of the year, especially in areas like equities.

At a half-year results presentation last week, investment-banking chief Robert E. Diamond Jr. said BarCap's expansion was on track.