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Varian Medical slips on weaker 2Q oncology orders

NEW YORK (AP) -- Varian Medical Systems Inc.'s profit rose in its most recent quarter, but orders for cancer treatment systems fell on weaker demand in North American and Europe.

The company's outlook for the current quarter fell short of Wall Street predictions, and it trimmed its sales guidance slightly for the year. Shares dropped $3.35, or 4.9 percent, to $65 in aftermarket trading.

The Palo Alto, Calif., company said its net income in its fiscal second quarter rose 5 percent, to $112.8 million, or $1.02 per share. Restructuring charges cost the company 2 cents per share. In the January-March period a year ago, Varian reported a profit of $107.8 million, or 94 cents per share.

Revenue rose 7 percent, to $768.4 million from $720.3 million.

Analysts were forecasting net income of $1.02 per share on $758.1 million in revenue, according to FactSet.

While revenue from oncology system sales rose 3 percent to $581.8 million, orders dropped 2 percent to $555 million. A decline of 9 percent in North America canceled out growth in emerging markets overseas.

Revenue for the company's X-ray division rose 14 percent to $140.4 million, helped by demand for new products.

For the current quarter, Varian expects per-share profit of 98 cents to $1.02 and that revenue will rise 7 percent, to about $755 million. Analysts expect profit of $1.05 per share and revenue of $766.8 million.

Varian is also slightly less optimistic on revenue growth for the year, now predicting a gain of 8 percent rather than 8 to 9 percent. That suggests revenue of $3.03 billion — analysts expect $3.04 billion.

The company tightened its profit prediction for the year to $4.09 to $4.14 per share from $4.08 to $4.16 per share.

Shares slipped 16 cents to close at $68.35 Wednesday before results were released.