Update: AstraZeneca strategy concerns weigh as it cuts 6,000 more jobs

Shares in AstraZeneca slipped back in late morning trade after the group reported better than expected fourth quarter earnings but its update failed to live up to heightened expectations.

The group stepped up its cost-cutting plan and said it now expects to cut 15,000 jobs by 2013. It had previously said it would cut 9,000 jobs by 2010 but even this failed to offset concerns about its strategic options.

Shares fell 117p, or 5.7%, to £27.43 after the group said its earnings per share for the quarter were $1.25, well ahead of the consensus forecast for earnings of $1.15 but failed to provide a hoped for update on the prospects for its drug sales in 2009.

The group said it will lift its dividend by 10% to $2.05 for the full year and said it has reduced its net debt by $1.9 billion.

‘Although investors will be encouraged by AstraZeneca’s decision to raise its dividend, the focus will be on how the company plans to maintain its position as number two in the UK market?  Despite a large pipeline of potential drugs to hit the market, the lack of sales growth forecast for 2009 is likely to spook the market,’ said Manoj Ladwa, derivatives broker at ETX Capital.

For the full year to 2009, sales rose 3% at constant exchange rates and core operating profit rose 9%. The group said its core operating margin improved thanks to the group's cost cutting measures. Some observers said sales also came in shy of forecasts adding to concerns about the group's future revenue stream.

ABN Amro analysts said the fourth quarter figures were not encouraging as a whole, with sales 2% below consensus.

They said the group's EPS outlook for 2009 looks a bit disappointing especially in light of the group's new hard hitting cost cutting plans.

They were also disappointed by the fact there would be no buybacks  this year as they had been expecting the group to spend around $2 bilion in 2009.

But the group's shares have outperformed through the current downturn and questions are now being raised about the group's prospects.