St. Jude Medical Inc. (STJ) swung to a fourth-quarter loss on acquisition-related charges, but posted a double-digit sales increase behind sharp gains in some of its smaller medical-device businesses.

The St. Paul, Minn., company is mainly known for implantable pacemaker and defibrillator heart devices, which comprise the bulk of sales. Sales there landed within the company's most recent forecasted range, while two smaller businesses - for products that address a specific heart issue and neurological devices - posted sales gains above 30%.

The atrial fibrillation and neuromodulation businesses fueled overall sales that edged ahead of Wall Street forecasts for the quarter despite the weakened economy, which St. Jude said has not caused problems thus far.

There had been some worry about a sluggish heart-rhythm business specifically, based on recent industry comments and analyst surveys. But Daniel J. Starks, St. Jude's chairman and chief executive, said the company saw "surprisingly stable growth dynamics" in that market.

"We have not seen weakness," he said during a conference call. "I suspect that one company's weakness might be another company's share gain."

St. Jude shares jumped $3.82, or 12.1% to $35.50 following Tuesday's report, which also included a modest boost to the most recent 2009 earnings forecast.

"Despite the concerns leading in the results, St. Jude posted strong numbers across the board," JPMorgan analyst Michael Weinstein said in a note to investors.

CEO Starks forecast that the heart-rhythm market will continue to grow in a mid-single-digit range, and that St. Jude will "continue gaining share." Still, heart-rhythm rivals Medtronic Inc. (MDT) and Boston Scientific Corp. (BSX) also traded higher Tuesday after St. Jude - the first of the three to report - signaled market stability.

Medtronic stock was recently up 94 cents, or 2.9%, to $33.96 while Boston Scientific traded 46 cents, or 5.8%, higher to $8.43.

St. Jude posted a fourth-quarter net loss of $194.5 million, or 56 cents a share, compared with year-earlier net income of $118.3 million, or 34 cents.

Excluding charges, such as write-downs and other charges related to last month's acquisition of MediGuide, earnings rose to 60 cents from 54 cents. The company on Dec. 1 had projected earnings of 56 cents to 60 cents, down from its prior forecast due to a strengthened U.S. dollar's negative affect on overseas sales.

Analysts surveyed by Thomson Reuters had projected earnings of 58 cents a share in the recent quarter.

Revenue rose 11% to $1.13 billion, with currency taking a $29 million hit. Revenue topped both St. Jude's revised forecast from December and the consensus analyst view.

The impact of currency fluctuations has been a concern because St. Jude derives roughly half of its sales from overseas markets and traditionally hadn't hedged against currency shifts. It started to do some transaction-based hedging late last year, however.

Sales in the company's heart-rhythm unit, which includes implantable cardioverter defibrillators and pacemakers, rose 7% to $680 million, landing within last month's reduced $660 million to $695 million forecast.

Sales of the defibrillators, known as ICDs, rose 8% from a year ago, when St. Jude had a one-time benefit from a Medtronic product recall. The devices provide shocks to stop abnormal and dangerous rhythm problems. Pacemaker sales climbed 5%.

The atrial fibrillation business, which includes tools used to fix that rhythm disorder, posted a 33% jump in sales to $156 million while the neuromodulation business, which includes devices that stimulate the spinal cord to treat severe pain, leapt 32% to $78 million.

Sales in both businesses topped the ranges St. Jude projected after reporting third-quarter results.

These businesses "are now starting to get some visibility because of their size and their performance," John C. Heinmiller, St. Jude's chief financial officer, told Dow Jones Newswires.

Sales in St. Jude's cardiovascular business rose 7% to $219 million in the fourth quarter.

St. Jude now sees 2009 earnings of $2.48 to $2.54, up from December's reduced forecast of $2.47 to $2.52. The company projected sales will land in a $4.71 billion to $4.89 billion range, rising 12% to 16% excluding the currency hit.

St. Jude's new forecast brackets the Wall Street outlook for earnings of $2.51 in 2009.

The company also projected a first-quarter profit of 57 cents to 59 cents a share, while analysts projected 59 cents.

CEO Starks said that St. Jude's business is not recession-proof, but is recession-resistant. "We're all worried about whether we will see an impact...but we just haven't seen it yet," he said during the conference call.

-By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com

(Katherine Wegert contributed to this report.)

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