Aside from the announcement last week that there will be between 1,500 and 2,000 Medtronic layoffs in the next three months, the Fridley-based device maker has had at least three other major layoffs between 2007 and 2010.
The financial performance of the quarter following each of those announcements has been mixed. Revenue always increased. But profits were hurt either by recalls or by a mix of restructuring charges and a change in the company’s accounting framework.
In May 2009, the company announced that it would cut 1,500 to 1,800 workers globally. That included about 400 workers in the United States who accepted early retirement or voluntary buyouts. The very next quarter that ended July 31, 2009, Medtronic reported a 6 percent increase in revenue to $3.93 billion. Profits fell 38 percent to $445 million, because of restructuring charges, legal costs and the impact of adopting a new accounting standard. Excluding these charges, the company’s profits increased 9 percent to $883 million.
In May 2008, the Star Tribune reported that the company would lay off 1,100 workers worldwide, including 350 in Minnesota. Revenue increased to $3.71 billion in the following quarter that ended July 25, up from $3.13 billion inthe same period a year ago. Net income jumped to $747 million in the quarter, up from $675 million in the same, year-ago quarter.
Again, in September 2007, Medtronic revealed in a regulatory filing that it would reduce its workforce by 900, including the 349 positions that had already been cut by July of that year. In the quarter ended Oct. 26, 2007, revenue increased slightly to $3.1 billion from $3 billion in the same period a year ago. Profits, however, fell to $666 million from $681 million a year ago. The Cardiac Rhythm Disease Management segment was particularly hard-hit with the recall of the defective Sprint Fidelis leads for the company’s implanted cardioverter defibrillator.
In last week’s earnings call, Medtronic executives described The Sprint Fidelis recall as the culprit in CRDM’s lackluster performance in Japan in the last couple of years where the company has lost market share. Overall, the segment, which accounts for the largest share in terms of Medtronic’s revenue, fell 2 percent to $1.22 billion in the quarter ended Jan. 25.
Despite the layoffs that have been announced over the years, Medtronic’s overall employment has grown between fiscal 2007 and fiscal 2010. The company employed 43,3211 full-time and full-time equivalent employees in fiscal 2010 up from 37,800 in fiscal 2007. However, that number seems to have fallen lately. A Medtronic spokesman said this week that the company currently employs 41,000 worldwide.
