Bristol to cut 10% of work force

NEW YORK (CNNMoney.com) -- The drugmaker Bristol-Myers said Wednesday it will cut 10 percent of its work force and get rid of more than half its factories to save $1.5 billion by 2010.

Bristol also raised its earnings per share guidance to a range of $1.65 to $1.75 for all of 2008, excluding charges. The company's previous 2008 guidance, and the projected consensus from analysts polled by Thomson Financial, was for EPS of $1.60 to $1.70.

The company also said it was reaffirming that 2007 earnings will be between $1.42 and $1.47 a share, excluding charges. Bristol-Myers Squibb earned $1.09 a share, excluding charges, in 2006.

In addition, Bristol said it was raising its quarterly dividend for the first time since 2002. The drugmaker said it was increasing the dividend by 11 percent to 31 cents per share, payable Feb. 1 to shareholders of record as of Jan. 4.

The New Jersey-based company did not specify how many jobs would be lost, but in an annual report one year ago Bristol said there were 43,000 employees. Because of the job cuts, Bristol said it would have to pay a pre-tax charge of $900 million to $1.1 billion.

Chief executive James Cornelius, at a meeting with analysts on Wednesday, described the restructuring as "a combination of cost-cutting and cost-avoidance." He also said the three-year outlook for the company includes "significant shrinkage in the workforce" across the company, but it doesn't rule out new hires.

"There are people we need to hire," said Cornelius. "There are gaps in our talent base we need to fill up."

Bristol-Myers (Charts, Fortune 500) stock slipped slightly on the news, though the job cuts didn't come as a surprise. Analysts and investors had been waiting for this announcement since July, when Bristol hinted at "work force reductions" during its second-quarter earnings announcement.

And just Tuesday, Bristol said it was closing a packaging plant in Panama, at the expense of about 100 jobs. At a meeting with analysts on Wednesday, Lamberto Andreotti, chief operating officer for worldwide pharmaceuticals, said that Bristol also plans to close plants in Puerto Rico and Spain.

Cornelius, the CEO, said that plant closures alone will save the company $400 million.

Despite the Cornelius' promise for new hires, this is not the time to be looking for a job in Big Pharma, where job cuts and plant closures are de rigueur. Some of the largest drugmakers are cutting costs to make up for patent expirations on former blockbusters and weak pipelines.

Abbott Labs (Charts, Fortune 500) said Tuesday that it was slashing 1,200 jobs, including 700 in Ireland and 500 in Temecula, Calif. Also on Tuesday, Merck & Co. (Charts, Fortune 500) said it was most of the way through its planned elimination of 7,000 positions, with only 1,000 job cuts left to go.

Pfizer Inc. is also undergoing a multi-billion dollar reconstruction, involving 10,000 job cuts.