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Watson warns about 3Q
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September 13, 1999: 11:47 a.m. ET
Says nicotine gum ruling to cut into earnings by as much as $10M
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NEW YORK (CNNfn) - Watson Pharmaceuticals Inc. shares dropped about 9 percent early Monday after the specialty drugmaker said a federal court ruling halting shipments of its nicotine gum product would cut into third-quarter earnings.
Watson (WPI) shares fell 3-3/16 to 33-9/16 Monday morning.
The Corona, Calif.-based company said earnings for the July-September period could fall by as much as $10 million, or 6 cents to 7 cents per diluted share, because of the loss of revenue and inventory as well as marketing expenses associated with the ruling.
The company was projected to post earnings of 45 cents per diluted share for the period, according to the consensus estimate of analysts surveyed by First Call. Watson earned 37 cents per share in the 1998 third quarter.
SmithKline Beecham, maker of the Nicorette smoking-cessation gum, is suing Watson, alleging copyright infringement involving an accompanying user guide and audio-cassette marketed with Watson's generic Nicotine polacrilex gum.
The U.S. District Court for the Southern District of New York issued a preliminary injunction Friday ordering Watson to stop sales and shipments of its product while the lawsuit proceeds, saying the companion materials are "strikingly or substantially similar" to SmithKline Beecham's user guide and audio-cassette.
American depositary receipts of London-based SmithKline slipped 9/16 to 61-9/16 on the New York Stock Exchange early Monday.
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