Medtronic to cut 600 jobs from state rolls

In another sign of the recession's broad reach, Medtronic announced Tuesday that it will eliminate 1,500 to 1,800 jobs worldwide, including 600 in Minnesota.

Medical technology jobs have long been seen as recession-proof because of growing demand from aging baby boomers who need devices to treat heart disease, aching backs and diabetes.

But the Fridley-based company, which employs about 8,000 Minnesotans, said Tuesday it needed to "streamline operations ... to further align the company with its long-term growth outlook." At the same time, Medtronic said it plans to add about 700 jobs, mostly in sales and in research and development. An unspecified number may be added in Minnesota.

The news came during a conference call with Wall Street analysts after the company released its fiscal fourth-quarter financial report, detailing a 69 percent plunge in quarterly profit because of restructuring and other charges. Revenue for the quarter decreased about 1 percent, to $3.8 billion.

Medtronic said about 400 U.S. employees have already accepted early retirement or voluntary separation by May 29, part of the total number of layoffs. Most of the layoffs, some of which will be involuntary, will be completed by June 30.

In addition to the company's headquarters in Fridley, Medtronic's Cardiac Rhythm Disease Management, Neuromodulation and Cardiac Surgery divisions are based in Minnesota. They haven't been immune from employee reductions; last May, 350 jobs in Minnesota were eliminated, and rivals such as Boston Scientific Corp. have laid off people in the past two years as well.

"In general, health care [employment] has been doing well" in the current downturn, said Oriane Casale of Minnesota's Department of Employment and Economic Development. "The growth rate is depressed, but it's still growing. The industries like medical devices that support the health care industry contribute to that growth."

A number of factors, not just the economy, have conspired to dampen sales of Medtronic's devices, including fierce competition from rivals, safety recalls, government investigations into the company's marketing practices, and a Food and Drug Administration warning about a top-selling spine product.

Medtronic said it earned $250 million in the quarter, or 22 cents a share, down from $812 million, or 72 cents a share, in the same period a year ago. Results met Wall Street's expectations.

Revenue for the quarter decreased about 1 percent, to $3.8 billion. After adjusting for a negative $211 million effect of currency translation, revenue grew 5 percent.

In a conference call with Wall Street analysts Tuesday, Medtronic CEO Bill Hawkins called the quarter "solid, despite a challenging economy."

Don Gerhardt, president and CEO of the local industry group Lifescience Alley, said that while some areas of med-tech are contracting, other areas are booming. "With Medtronic, you've seen a flattening out of some of its cardiac products, but its [Neuromodulation] division is doing really well."

Medtronic stock closed at $31.76 Tuesday, down $2.20 or 6.5 percent.