St. Jude Cuts Another 500 Jobs, 100 in MN

As part of a reorganization plan that the company expects will help cut costs, St. Jude will reduce its global work force by approximately 5 percent—in addition to the 300 jobs it eliminated in August.

St. Jude Medical, Inc., has cut 500 jobs—including 100 in Minnesota—as part of its ongoing efforts to realign its business units and reduce costs, company spokeswoman Kate Stoltenberg confirmed Friday.
 
The cuts are on top of 300 job cuts announced in August, of which 80 were in Minnesota. The latest cuts represent approximately 5 percent of St. Jude’s global work force, the company said in a Thursday filing with the U.S. Securities and Exchange Commission (SEC).
 
Stoltenberg said that the last day for affected employees was Thursday. The layoffs affected positions in St. Jude’s “support functions,” including information technology, human resources, legal, business development, and marketing, according to the company’s SEC filing.
 
The medical device maker’s reorganization plan, which was also announced in August, involves combining its product divisions into two units. Its atrial fibrillation division and its cardiovascular division—which operate out of Minnesota—have come together under a new cardiovascular and ablation technologies division. And its cardiac rhythm management division and neuromodulation division—which operate out of California and Texas, respectively—now operate under a new implantable electronic systems division.
 
The company said at the time that the organizational changes would reduce its pre-tax operating expenses by between $50 million and $60 million annually beginning in 2013 and are “part of a comprehensive plan to accelerate our growth.”
 
St. Jude expects to incur pre-tax charges of between $40 million and $60 million as a result of the latest layoffs, bringing the total cost of its reorganization plan to between $150 million and $200 million.
 
The company’s third-quarter earnings—announced in mid-October—were down 22.5 percent compared to the same quarter last year. For the quarter that ended on September 29, it reported net income of $176 million, or $0.56 per share, and net sales of $1.326 billion—down 4 percent from the same period last year. The company’s cardiac rhythm management products, which include pacemakers and defibrillators, saw the largest decline in sales, which totaled $691 million for the quarter—down 8 percent from a year earlier.
 
St. Jude shares closed Thursday at $38.77, down about 0.5 percent, on news of the job cuts. They were trading down about 0.67 percent at $38.51 on late Friday afternoon.
 
St. Jude isn’t the only medical device company that has announced job cuts in recent months. In May, Fridley-based Medtronic, which has also reported weakened heart device sales, announced plans to eliminate 1,000 jobs—including 250 in the Twin Cities.
 
Little Canada-based St. Jude is among Minnesota’s 15-largest public companies based on revenue, which totaled $5.6 billion in 2011.