business

Medtronic Inc., the Fridley-based maker of electronic heart devices, said it will trade slower growth for increased returns to shareholders amid slumping sales of defibrillators, its biggest product.

Earnings per share will rise 11 to 14 percent annually during the next five years, while sales will climb as much as 11 percent a year, mainly overseas, under a plan revealed by Chief Executive William Hawkins at a conference for analysts and investors in New York. The company -- which announced 1,100 job reductions last month, about 350 of them in Minnesota -- also will reduce costs further, he said.

Hawkins, who took over in August, has been under pressure to provide his plan as the defibrillator business has been roiled by safety recalls and slowing sales.

His new emphasis on devices that treat diabetes and nerve-related disorders acknowledges the maturation of the company and increasing competition for the heart-shocking devices, he said.

"We have kind of had to reset the expectations," Hawkins said in an interview after the conference. "We still believe we can deliver market-leading performance, but the markets are different today than they were 10 years ago."

At the conference, Hawkins said he'll focus on foreign markets and products with more growth potential, including neuromodulation, which involves an electrical brain implant that can suppress Parkinson's disease tremors and other disorders.

"We expect these markets to deliver significant growth to Medtronic over the next five years," he said.

Sales of products in Medtronic's spinal, cardiovascular, diabetes and surgical technology units will increase 10 to 15 percent a year, Hawkins said. The cardiac rhythm division, where defibrillators and pacemakers account for 37 percent of the company's revenue, will have 5 to 7 percent higher sales in each of the next five years, he said.

Medtronic forecast revenue of $15 billion to $15.5 billion for the fiscal year ending next April, and earnings of $2.94 to $3.02 a share, excluding any extraordinary items, according to a May 20 statement.

Medtronic shares fell 35 cents to close Monday at $50.32. The company's stock has declined 5.7 percent in 12 months.

"Hawkins realized he needed to reshape the story line to create confidence," said Michael Weinstein, a J.P. Morgan analyst who attended the conference, in an interview. "This is the road map for management, and I think overall that it's going to be well-received."

Chief Financial Officer Gary Ellis said the company's diverse product line, combined with plans for more share repurchases and increased dividends, provided enough "levers" to meet revenue and earnings goals.

The revenue target "is very realistic and it doesn't require all of our businesses to be hitting on all cylinders," he said.

Asked about acquisition plans, Hawkins said Medtronic might snap up smaller companies. He said he foresees no "major, transformational" deals.