Executive Business Briefing

Here is a look at Thursday's top business stories:

Smith & Nephew buys Centerpulse


LONDON, March 20 (UPI) -- Smith & Nephew Plc , a U.K.-based medical-device company, said it plans to acquire Centerpulse AG of Switzerland for around $2.35 billion, creating the world's third-largest orthopedics company.

The combined company, to be called Smith & Nephew Group, would trail only Johnson & Johnson and Stryker Corp. of the United States in the global market for hip, knee and other joint replacements.

The market, which is worth around $14 billion in annual sales, is growing at around 15 percent a year.

The deal is subject to regulatory approval but has been accepted by Centerpulse and should have a positive impact on earnings from 2005.

"This isn't a cost cut combination, it's a build and platform growth combination," said Chris O'Donnell, Smith & Nephew's chief executive, adding that it would result in few job cuts.


The deal focuses Smith & Nephew squarely on orthopedics, which would generate around 75 percent of the combined company's revenue. While at the helm, O'Donnell has restructured S&N into four core divisions: orthopedics, wound management, endoscopy and rehabilitation, but always said he was on the lookout for an orthopedics tie-up.

As part of the deal, Smith & Nephew also will make a recommended offer for InCentive Capital AG, a listed investment company which has a 19 percent stake in Centerpulse.

While Centerpulse is the largest orthopedics group in Europe, it only has a 6 percent slice of the U.S. market. The combined company will have a U.S. sales force of around 900, comparable to Stryker but still behind J&J. Outside the U.S., the three companies will have roughly comparable sales forces.

Centerpulse brings with it a presence in the spine market, which is the fastest-growing segment of the orthopedics sector, a strong dental implant business and access to key orthopedic surgeons, Smith & Nephew said.

Tweeter Home Entertainment cuts outlook

CANTON, Mass., March 20 (UPI) -- Tweeter Home Entertainment Group Inc. has slashed its second-quarter sales and earnings guidance as the weather and economic and world conditions hurt results.


The company said it previously expected same-store sales to be down 5 percent to 8 percent, but a 12 percent decline thus far in March led Tweeter to widen the anticipated decrease to between 12 percent and 15 percent.

The company said Jan. 30 that second-quarter revenue would be between $193 million and $198 million.

The sales weakness is prevalent in all regions, Tweeter said, with February weather hitting the Northeast particularly hard.

Total sales are still difficult to predict because of current economic conditions and world events, Tweeter said.

Plexus lowers earnings outlook

NEENAH, Wis., March 20 (UPI) -- Plexus Corp. has revised its second-quarter revenue and per-share results guidance downward for the second time in three months following greater near-term operating inefficiencies.

The contract electronics manufacturer said it now expects revenue of $190 million and a loss of 10 cents to 12 cents a share.

On Jan. 23, Plexus backed lowered expectations for revenue of $190 million to $200 million and a loss of 2 cents to 5 cents a share.

Analysts on Wall Street had expected the company to post a loss of 4 cents a share and revenue of $192.5 million, according to Thomson First Call.


Plexus said ongoing softness across all end-markets led the company to narrow its revenue prediction.

The company also explained that the implementation of restructuring generated the greater inefficiencies, which then became the primary reason for the wider loss in the second quarter.

In December, Plexus made plans to close a manufacturing facility in San Diego as part of the restructuring.

Plexus expects to have about $100 million in cash and equivalents at the end of the second quarter, with virtually no debt.

The company plans to report second-quarter results on April 24.

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