Medtronic Earnings Call Insights: Emerging Markets Analysis and CRM Business
Emerging Markets Analysis
Matthew Dodds – Citigroup: Omar, first for you. Emerging markets was up 14%. Sounds like if you make a few a minor adjustments, maybe 15% to 17%, but it’s below I think your plan of 20% plus. And when we look at fiscal ’14, do you think 20% plus is still reasonable for emerging markets or is 15% to 20% more reasonable just based on what you think the markets are growing?
Omar Ishrak – Chairman and CEO: I think, look, 20% certainly is a number to be stated, but it’s something that as we’ve been through this is a number that we’ve got to work towards and that’s certainly going to be our goal. But I think 15% to 20% if you’re going to pick between the two, I think 15% to 20% is probably a more realistic outlook, but look, I’m holding all the regions accountable to try to get to 20%, but there are barriers here that we have to overcome which is taking perhaps a little longer than we originally anticipated, so that’s why I was saying that.
Matthew Dodds – Citigroup: Then Gary a quick one for you. I know you don’t like giving quarterly guidance, but if you look at the first call progression, is the $0.90 for Q1 reasonable or should we think about more of a ramp as we go through the year?
Gary Ellis – SVP and CFO: Well, as you said, we don’t like to involve quarterly guidance out, but I mean as we highlighting on our expectations the $3.80 to $3.85 obviously include some operational things we have to – the headwinds we are dealing with the interest expense, the medical device tax for example, and if you take those into account I think the $0.90 right now is indicating like a 6% to 7% growth in earnings per share, which would be basically not including the medical device tax and interest expense come from the modeling. So, right now my guess is if you looked at it, yes, I would – I probably would see a shift. I think if you update your models, you’ll probably be shifting a couple of cents from Q1 to Q4. But in general that guidance we gave should really kind of play across all the quarters, as we go forward here. So I think the number currently in Q1 is probably a little bit high as people (indiscernible) their models.
Michael Weinstein – JP Morgan: So, if I look at the U.S. business, it’s your best quarter in I think in three years maybe even a little bit more than that or if one way we’ve been look at it everybody is trying to wait for you to anniversary the U.S. resolute launch is that if we looked at ex-resolute, it’s also your best quarter in a few years. So, then one question probably everybody has is repeatability and if you could just talk about in particularly the performance in the CRM business this quarter in the U.S. and whether you feel like that’s a sustainable number or there was anything that really pushed it at the end of quarter?
Gary Ellis – SVP and CFO: Look, I think we’ve certainly seeing signs end markets stabilizing to some degree. But there are many dynamics here including ability to launch new products and some level of share gain in this. And I’m going to ask Mike Coyle to really take this on because the share and thing obviously driving it. So, Mike why don’t you provide some color to this?
Michael J. Coyle – EVP and Group President, Cardiac and Vascular Group: We’re obviously on the frontend of pretty robust new product introduction cycle here in the U.S. with Advisa MRI in early part of the quarter, but really sort of have impact in the back end to the quarter. And we will be just heading into our high tower product introductions with both the Viva/Brava system here in the CRT-D segment and then Evera device system as well. So, that’s really the thing that’s giving us a catalyst not only in terms of market share, but also giving us some cover for the pricing pressures not just because of these high-end technologies, but now we have multiple tiers to deal with competitive price dynamics. So, those are the primary drivers and as you saw we are also continuing take market share in the DES segment with Resolute Integrity and we are seeing general strength across the businesses, across CVG. So, I think we are really getting some benefit principally as we talked about before from the ship over to CRDM picking up the ball here from what Resolute Integrity has been providing us in last fiscal year…
Michael Weinstein – JP Morgan: Let me try and cover few items you covered on a call real quick here. One, you said you expect CoreValve approval in the U.S. in the first half of FY ’15, the question there is have you gotten signoff from the FDA to separate two cohorts and submit the extreme risk cohort early? Then second question I’ll sneak in is on the commentary around the FDA and the insulin pump quality systems, it’s sound like that’s going impact the timing of 530G approval. Can you just give us some insights there?
Omar Ishrak – Chairman and CEO: Let me quickly take on the diabetes question and then I’ll ask Mike to provide the answer for the CoreValve, and given the diabetes clearly until we get approval it’s not going to get launched and so that doesn’t affect the timing to some degree. We are planning for it within the calendar year. I think that’s the best I can tell you right now. We are working closely with the FDA and doing everything we can to ensure that the quality systems are compliant and further requirements and in additional, we are looking at them on any other need they have — that they for the approval itself. So, the best I can tell you is that we’re still looking at it for the calendar year. When exactly, it’s impossible for me to estimate.
Gary Ellis – SVP and CFO: On the CoreValve IDE nothing really has changed. We’ve completed the enrollment phase in the extreme risk side. I mean, we completed the follow-up phase in the extreme risk side, high risk, we will be finishing up here in the coming quarters. At this stage, we are viewing those as being submitted modularly, but planning for them to be reviewed to together and if that changes based on what the data looks like then we will communicate that.
Michael Weinstein – JP Morgan: Mike, so just I’m clear on that. So, if the FDA waits for the high risk arms in order to review then it’s unlikely you would have approval in the first half of FY ’15?
Michael J. Coyle – EVP and Group President, Cardiac and Vascular Group: We see a path to getting there that way, but it would certainly be much more difficult.
A Closer Look: Medtronic Earnings Cheat Sheet>>