Merck & Co. (NYSE: MRK) posted earnings that look pretty good on the surface.  The problem is that the surface is about the only thing that looked appealing for the drug giant today. Merck posted $0.86 EPS on a constant basis on $6.1 Billion in worldwide sales.  First Call estimates were $0.83 EPS on $6.05 Billion in revenues. 

To make matters worse, the company has opted not to give 2008 and long-term guidance on earnings and revenues to assess the effects of today’s Vytorin study data. 

Vytorin sales were already down 14%, and now with today’s very cautious data it’s just hard to think much here that is positive.  Its Gardasil cervical cancervaccine sales were down and it offered 2008 guidance of $1.4 to $1.6 Billionin global Gardasil sales.  Fosamax sales were also down and it gaveguidance for 2008 at $1.4 to $1.7 Billion for that franchise.  Merckalso noted that its pre-tax expenses for restructuring will run $220 to$300 million for 2008.  As far as the rest, it just doesn’t reallymatter for now.  The damage has been done.

Shares had closed down over 6% at $35.33 today in regular trading andshares are down another 8% at $32.50 in after-hours trading.  Its52-week trading range was $34.49 to $61.62.

For some reason this feels like being the proctologist for the traveling circus, and you keep getting the Siamese twins revisiting every day.

Jon C. Ogg
July 21, 2008

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