NORTH CHICAGO (AP) -- Abbott Laboratories Inc. said Wednesday that its net income fell more than 50 percent in the third quarter because of the spinoff of its branded drug business, but the results from remaining operations beat Wall Street expectations.
The company also raised its dividend 57 percent to 22 cents per share, sending shares higher in morning trading.
The period ended Sept. 30 marked the third quarter since Abbott spun off its branded drug business into a separate company called AbbVie. Abbott's current business is built around its remaining products, including nutritional formula, medical devices and generic drugs.
Net income from those remaining businesses was $873 million, or 55 cents per share, up from $666 million, or 42 cents per share, in the third quarter of last year. That was better than Wall Street estimates, though the company's sales came in below expectations at $5.37 billion.
Analysts polled by FactSet had predicted earnings per share of 52 cents per share on $5.41 billion.
The company said sales were hurt by a recent recall of products containing ingredients from Fonterra, a leading dairy supplier based in New Zealand.
Fonterra sparked a global recall of infant formula in August after announcing it had discovered the presence of bacteria that cause botulism in some of its products. Further testing showed it was likely a false alarm.
Sales of nutritional formula edged 2 percent higher to $1.6 billion. Those sluggish results were offset by higher sales of diagnostics, which rose 8 percent to $1.1 billion and medical devices rose 2 percent to $1.3 billion.
Abbott reiterated its full-year earnings guidance of $1.98 to $2.04 per share. Wall Street analysts are looking for $2 per share.
In a separate announcement, the credit rating agency Moody's downgraded Abbott's outlook to "negative" from "stable," based on the company's plan to raise its dividend in 2014.
Moody's said the dividend boost "reduces the company's ability to fund its U.S. cash needs without incremental debt."
Shares of Abbott Laboratories rose $1.74, or 5.2 percent, to $35.45 in midday trading Wednesday.