Drugmaker Schering-Plough Corp. (NYSE: SGP) reported this morning a drop of 48% in its fiscal first-quarter profit, hurt by higher costs tied to a buyout in the prior quarter. However, the company was able to post adjusted earnings well above analysts' predictions, pushing its shares up in morning trading.

Schering-Plough's profit during the first-quarter plunged to $291 million, or 15 cents a share, dragged down by charges related to its acquisition of Organon Biosciences NV. Excluding items, Schering-Plough's earnings figures would have come at 53 cents per share. Analysts' forecasts (which typically exclude one time items) were for 37 cents per share in the quarter.

The company's quarterly revenue jumped by a respectable 57% to $4.66 billion. For the period, the company benefited from strong gains from Organon, which came with sales of $1.3 billion. Anti-inflammatory Remicade sales also saw a growth of 36%, while allergy treatment Nasonex revenue saw a rise of 8%. Higher drug prices offset lower prescriptions in the U.S. Analysts, on average, expected Schering-Plough's revenue to be $4.52 billion, according to Thomson Reuters.

Today marked the end of the first quarter of 2008, and the markets ended on an up-note today. The gains in the DJIA today were within a few points of closing up for the month of March 2008. The DJIA hasn't had a positive month since October 2007.

One of the premiere helping hands came from Hank Paulson's proposals that would regulate more players in the financial services industry ahead. Another note was that the Chicago Purchasing managers Index actually gained from 44.5 in February to 48.2 in March, also above the 47.3 estimates. Below are the unofficial closing levels for the DJIA:

• DJIA 12,262.89 (+46.49, +0.38%)
• NASDAQ 2,279.10 (+17.92, +0.79%)
• S&P500 1,322.69 (+7.47, +0.57%)
• 10YR-TBond 3.432% (-0.034%)
• Full 52-Week Lows

Citigroup Inc. (NYSE: C) announced today that it plans to reorganize its consumer credit card business into two parts, Consumer Banking and Global Cards. Analysts doubt the move will eventually result in a spin-off of the unit. The regionalized restructuring will allow more localized control which should enable Citigroup to target international markets more effectively.

Shares of Schering-Plough Corp. (NYSE: SGP) and Merck & Co. (NYSE: MRK) were obliterated today after a major study cast doubt on the effectiveness of their cholesterol-fighting drugs Vytorin and Zetia.

Schering-Plough fell $5, nearly 26%, to $14.47 in early afternoon trading while Merck plunged $6.67, or 15%, to $37.84. As the New York Times and other media outlets noted, the news from the American College of Cardiology couldn't have been much worse for investors.

A scientific panel said the drugs failed to slow the growth of plaques in arteries associated with heart attacks and strokes. It also urged physicians and patients to "rely more heavily on older cholesterol-lowering drugs called statins, which have proven benefits and can be cheaper," according to the Times.

For Schering-Plough, the results are potentially devastating because both drugs account for about 70% of the company's profit, according to analysts' cited by the paper. You have to wonder how much longer Schering-Plough can remain independent.

About the only winners from this mess are the media companies. Those annoying commercials for the drugs helped fatten their bottom lines during a period of uncertain consumer spending. If the companies have any hope of salvaging these products, they are going to need to open up their checkbooks and buy lots and lots of advertising.

Freelance journalist Jonathan Berr writes and edits the blog Ketchup and Eggs.

TheStreet.com's Jim Cramer says the bad news is relentless, and people are discouraged.

Each day seems to be filled with so much disappointment. The American Axle (NYSE: AXL) (Cramer's Take) strike, for example, has now pretty much shut down General Motors (NYSE: GM) (Cramer's Take), and I see no signs that AXL can defeat the union. Given how heavily dependent the Midwest region is on GM for steady income, this one can only exacerbate the terrible real estate market and hence the terrible mortgage delinquencies that pockmark Indiana, Michigan and Ohio.

Or the loss of the Absolut brand for Fortune Brands (NYSE: FO) (Cramer's Take). Fortune needed to win this one because its home improvement business is falling off a cliff. This was a vain attempt to diversify a division that has always helped the company in tough times.

Or the Vytorin studies, nothing new, as we knew that parts of the medical community doesn't approve of the drug, but the analysts had held out hope and we have and are going to see repeated downgrades of the stock. I am telling subscribers of Action Alerts PLUS that Schering (NYSE: SGP) (Cramer's Take) stock, at $16 -- where it is surely headed -- has now lost more than half its value, which reflects the pulling of the drug. As 50% of the company's earnings are reportedly from the drug, perhaps that's a fitting decline. I think SGP is worth a lot more because of the purchase of Oraganon. I have been very wrong. My solace: So many others have been, too.

Schering-Plough (NYSE: SGP) is recently at $15.80 in pre-open trading, below its close of $19.47.

A panel of cardiologists called on physicians to sharply curtail their use of cholesterol-lowering drugs Vytorin (combination of Merck's (NYSE: MRK) Zocor an SGP's Zetia) and Zetia after a clinical study showed the drugs didn't work better than less expensive statin drugs.

SGP April option implied volatility of 58 is above is 26-week average of 36 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Here are some highlights of this past week's earnings coverage from BloggingStocks:

• Applied Materials Inc. (NASDAQ: AMAT) first-quarter profits fell due to market conditions.
• Best Buy Inc. (NYSE: BBY) lowered its earnings forecast on declining sales.
• Campbell Soup Co. (NYSE: CPB) posted unexciting second-quarter results, but shares rose anyway.
• Chipotle Mexican Grill Inc. (NYSE: CMG) posted solid results but fell short of expecations.
• Comcast Corp. (NASDAQ: CMCSA) beat expectations and annouced it first dividend in a decade.
• Denny's Corp. (NASDAQ: DENN) fourth-quarter results were dragged down by the sale of restaurants.
• General Motors Corp. (NYSE: GM) posted a record loss and made a buyout offer to union employees.
• Hasbro Inc. (NYSE: HAS) post better-than-expected fourth-quarter results on popularity of the Transformers.
• Jones Apparel Group Inc. (NYSE: JNY) narrowed its loss in the fourth quarter as restructuring continued.
• Lions Gate Entertainment Corp. (NYSE: LGF) missed earnings estimates despite strong revenue growth.
• Marriott International Inc. (NYSE: MAR) profit fell on losses from discontinued operations.
• Molson Coors Brewing Co. (NYSE: TAP) beat estimates as profits rose 75%.
• PolyOne Corp. (NYSE: POL) beat expectations and raised its guidance.
• Schering-Plough Corp. (NYSE: SGP) beat expectations, excluding a charge for acquistion costs.
• UBS (NYSE: UBS) posted a big loss on write-downs due to the subprime crisis.
• VNUS Medical Technologies Inc. (NASDAQ: VNUS) beat expectations on strength overseas.
• World Wrestling Entertainment (NYSE: WWE) beat expectations despite weakness in its movie business.

Also, Jim Cramer defends his interest in GM after its record loss.

Upcoming results to watch for include Wal-Mart (NYSE: WMT), Hewlett-Packard (NYSE: HPQ), OfficeMax (NYSE: OMX), Whole Foods (NASDAQ: WFMI), MGM Mirage (NYSE: MGM), JCPenney (NYSE: JCP), and Safeway (NYSE: SWY).

Visit AOL Money & Finance for more earnings coverage.

Schering-Plough Corp. (NYSE: SGP) shares are trading higher this morning after the company reported a fourth-quarter profit of 27 cents per share, excluding special items. Analysts expected a profit of 24 cents per share. After accounting for special charges from its acquisition of Organon Biosciences late last year, SGP actually lost $3.4 billion, or $2.08 per share, in the quarter, but investors are usually more interested in the adjusted numbers. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on SGP.

After hitting a one-year high of $33.81 in May, the stock hit a one-year low of $17.45 in January. SGP opened this morning at $21.43. So far today the stock has hit a low of $21.26 and a high of $22.01. As of 10:40, sGP is trading at $21.73, up $1.11 (5.4%). The chart for SGP looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

MAJOR PAPERS:

• With a possible coming recession, J.C. Penney Company Inc (NYSE: JCP) CEO Myron "Mike" Ullman is expected to today announce plans to merge the buying and marketing operations for store and online sales and cut up to 200 jobs, the Wall Street Journal reported.
• The Wall Street Journal also reported that the warning from UBS AG (NYSE: UBS) that its write downs for 2007 would be $4B higher than forecast is an indicator that other Wall Street banks are still vulnerable to the subprime crisis; Citigroup Incorporated (NYSE: C) and Merrill Lynch & Co Inc (NYSE: MER) may be the most vulnerable to the next wave of write downs.

WEB SITES:

• Merck & Co Inc (NYSE: MRK) and Schering-Plough Corporation (NYSE: SGP) perform quite differently, despite jointly marketing Vytorin, Barron's reported. while Merck offers a golden opportunity for bargain hunters, Schering's prospects remain less certain with the company relying on Vytorin for more than one-third of its pretax profits, according to estimates from Lehman Brothers.

The Wall Street Journal reports that Attorney General Andrew Cuomo has launched an investigation into both Merck (NYSE: MRK) and Schering-Plough (NYSE: SGP).

The New York AG is concerned that both companies may have "deliberately concealed" negative results from a clinical trial for Vytorin, known as Enhance. Vytorin is a drug marketed to treat cholesterol.

According to the article, "the Enhance clinical trial cast doubt about whether Vytorin is better than a cheaper generic drug in slowing the progression of cardiovascular disease, even though Vytorin was more effective in reducing LDL, the so-called bad cholesterol, which is a major risk factor for heart attacks."

Behind the issue is timing. According to the article, the Enhance trial was completed in April 2006, but the companies didn't disclose the results until January 2008. During that time, combined annual sales of Vytorin and a sister drug, Zetia, grew to more than $5 billion.

That's not chump change.

Both Merck and Schering-Plough are down pretty strongly off the news flow last week.

Cramer says to buy this extremism. What do you think?

Zack Miller is the Managing Editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.

Now that Merck & Co. (NYSE: MRK) and Schering-Plough Corp. (NYSE: SGP) both posted better-than-expected second quarter earnings, will investors show some love to big pharma?

Shares of Merck are down about 5% over the past three months while Schering-Plough has eeked out a mere 2.5% gain. Perhaps investors are worried about Merck's Vioxx legal battles, which so far it has largely won, and the controversy surrounding its cervical cancer vaccine Gardisal. Schering-Plough's $14.4 billion acquisition of Akzo Nobel's Oreganon unit may also be concerning some people. Maybe people think that if Pfizer Inc. (NYSE: PFE) is up the creek, all big drug companies are in the same boat.

Regardless, both companies posted impressive numbers that should quell the concerns of investors. Their stocks remain pretty cheap. Merck trades at a forward price-to-earnings multiple of 17, slightly cheaper than Schering-Plough's 20.

Merck, based in Whitehouse Station, New Jersey, reported net income of $1.65 billion or 77 cents, up from $1.5 billion, or 69 cents a year earlier. Revenue jumped 5.9% to $6.1 billion fueled by demand for blockbusters such as the high-cholestoral treatment Vytorin which it makes in a joint venture with Schering Ploug. Excluding some costs, Merck earned 82 cents, beating the 72 cent-average estimate of analysts surveyed by Thomson Financial. The revenue figure also beat the $5.77 billion, analysts had expected.

Vytorin also boosted results at Kenilworth, NJ-based Schering Plough. Net income climbed to $539 million, or 34 cents a share, more than doubling from $259 million, or 16 cents. Revenue jumped 14% to $3.2 billion. Excluding some costs, profit was 41 cents, beating the conesensus forecasts of 35 cents. Revenue also beat expectations of $3.07 billion.

"Once in critical condition, Schering-Plough has staged a remarkable turnaround," says Dan Sullivan, who recently selected the drug maker as his Spotlight Stock of the month.

The editor of The Chartist -- a top performing newsletter that uses a relative strength model in determining its portfolio holdings -- explains, "Earlier in the decade Schering-Plough drug maker was plagued with a series of problems and it appeared that the recovery process would be long and difficult."

Under its previous CEO, Richard Kogan, he notes, it faced record government fines for quality control problems in its manufacturing plants, an SEC investigation, alleged Medicaid fraud, and the loss of its patent for its allergy drug Claritin, which accounted for about 34% of worldwide sales in 2001.

The shares, he observes, traded at a high of 60 in 2001 and fell into the mid-teens in 2003. He states, "To rescue it from life-support, Schering-Plough hired Fred Hassan to replace Kogan as CEO."

The advisor suggests that most analysts doubted that Hassan could overcome the problems facing Schering-Plough (NYSE: SGP). The consensus, he notes, was that the company would be broken up or sold off to one of its rivals. So far, says Sullivan, the critics have been proven wrong.

On a day that looks to be pretty ugly for the market, Merck & Co. (NYSE: MRK) could see some price gains following this morning's first quarter earnings release.

The drug maker announced that it saw a 12% jump in its first quarter profit. This jump can mainly be attributed to higher sales for asthma and cholesterol drugs. The company shattered estimates for total sales in the quarter with $5.77 billion, which showed a 7% jump from the same period a year ago of $5.41 billion. Analysts had been expecting the company to post sales of $5.36 billion.

On an earnings per share basis, the company reported that excluding a 6 cents per share restructuring charge, earnings would have come in at 84 cents per share. This matched what analysts had been expecting to see from the company.

A big reason for the company's strong sales growth comes directly from their cholesterol drugs Zetia and Vytorin. The combined sales of these drugs totaled $1.2 billion, which represents a 47% increase. Merck sells these drugs in partnership with Schering-Plough (NYSE: SGP) and the two companies share in those revenues.

Break-up valuations of major U.S. companies continues to show disconnect between intrinsic values and market values.

24/7 Wall St. is looking at the break-up values of a number of large cap companies. Firms with market caps of over $100 billion have been kept off the list because they are likely to be too large for private equity buy-outs. But, the following companies may well end up as targets. Detailed methodology.

I calculated Schering-Plough Corp.'s (NYSE:SGP) break-up value to be $29.67 while the stock's current price is $25. Consumer health and animal health businesses have low valuations, but the pharma unit is still a treasure. Detail.

Texas Instruments Inc.'s (NYSE:TXN) break-up value is $35, again higher than the stock's current price of $31.20. The company usually trades at 3x to 5x sales and is at the bottom of that range. Wireless chip unit should be divested. Detail.

United Technologies Corp.'s (NYSE:UTX) break-up value is $67, right around the stock's current price of $68. UTX has doubled in the last four years, making it fully valued. Pratt & Whitney and Hamilton Sundstrand companies, manufacturers of aircraft engines, generation systems and aviation controls are running on 16% operating margins and are more valuable than the balance of the units. Details.

Douglas A. McIntyre is a partner at 24/7 Wall St.

.

I feel like singing, or chanting, 12-thousand-points, 12-thousand-points. That's it, you will no longer have to hear me wondering every single day whether today would be the day, because as you all know, yesterday was the day. Yesterday the DJIA closed above 12,000, for the first time. Ever. The market already was in record territory before, and seems it would continue to explore that territory, as still, even as I write this, futures point to to a higher start for stocks.

And talk about Google Inc. (NASDAQ: GOOG). With Google, it would be less of a chant, more of a hail - Goo-gle, Goo-gle. Hey, if Cramer can "tattoo" GOOG on his forehead, I can chant. Talk about third quarter earnings results -- profits nearly doubled. Talk about beating the Street's estimate, talk about optimism going forward. Indeed, this darling, can do no wrong. Even the bears had a hard time staying in form after Google's report.

Completely raining on our Google parade is oil cartel OPEC with its decision to cut production by 1.2 million barrels a day, more than the expected 1 million barrels. Also, some members indicated they were open to further cuts. Oil prices have consequently risen. As I mentioned above, though, so far, Google is leading the sentiment and the OPEC decision doesn't seem to drag the market down. Perhaps I should add 'yet' and advise to follow oil prices today as they could potentially change the market's direction.

Now, if yesterday we had an avalanche of earnings being reported, today we only have a flood. Three more Dow companies will report today and will bear closer attention. Even though Google will definitely affect the market positively, the earnings' reports might either help, or turn sentiment around, depending on the results. So far, however, we had more better-than-expected results than disappointing ones overall.

Drugmaker Merck & Co., Inc. (NYSE: MRK), heavy machinery maker Caterpillar, Inc. (NYSE: CAT), and conglomerate 3M, Inc. (NYSE: MMM) -- better known as the post-it maker -- are the three Dow companies reporting today.

Schering-Plough Corp. (NYSE: SGP) reported third-quarter net income of $309 million, up from a year-ago profit of $65 million. After dividends, the company earned 19 cents a share. Analysts were expecting 15 cents a share.

Other companies reporting today include Xilinx, Inc. (NASDAQ: XLNX), Broadcom Corp. (NASDAQ: BRCM) and SanDisk Corp. (NASDAQ: SNDK).

Other corporate news:

• According to The Financial Times, European billionaires Bernard Arnault and Albert Frere are considering a bid for Ford Motor Co.'s (NYSE: F) Aston Martin, the luxury automaker.
• Still in autos, according to the Wall Street Journal, DaimlerChrysler AG's (NYSE: DCX) Chrysler Group will study restructuring moves, including the potential closure of an plant.

Yesterday, bonds fell, with the yield on the benchmark 10-year Treasury falling to 4.78% late in the day from 4.76% late Tuesday. Treasury prices were lower this morning, lifting the yield on the 10-year note to 4.79%.

Overseas, Asian markets closed mostly higher. European markets are also higher at the moment.

Futures are higher in early morning trade (8:00 a.m.), pointing to a higher start for stocks.

Here's a look at some key Blogging Stocks:

Apple Computer, Inc. (NASDAQ: AAPL) last traded at $79.15 in pre-market trading, up from yesterday's close of $78.99. Apple shares soared yesterday after Wednesdays it reported earnings that easily topped Wall Street expectations on improved sales of Macintosh computers and iPod media players. Apples stock rose 6%, the third-biggest point gainer on NASDAQ.

General Electric Company (NYSE: GE) closed at $35.28 yesterday. Japan's financial regulator ordered GE's consumer finance arm to suspend debt-collection calls for 5 days after a borrower complained about unwanted phone calls to his workplace.

Time Warner Inc. (NYSE: TWX) closed at $19.70 yesterday. America Online is planning to make acquisitions in Europe, a German newspaper quoted its chief executive as saying on Thursday.

Wal-Mart Stores, Inc. (NYSE: WMT) closed at $48.49 yesterday. Arkansas officials say that Wal-Mart's decision to expand its $4 generic prescription drug program into the state will save $2.5 million a year in state Medicaid costs.