MINNESOTTA, United States – MEDTRONIC Inc, the world’s largest medical device maker, saw its fiscal first-quarter earnings slip one per cent as challenges in two of its biggest businesses countered overseas revenue gains.

The Minneapolis-based company said net income fell to US$821 million, or 77 cents per share, from US$830 million, or 76 cents per share.

Adjusted earnings, which exclude one-time items, were 79 cents per share, for the quarter that ended July 29.

Revenue climbed seven per cent to US$4.05 billion, with most of the increase attributable to favourable foreign currency rates.

Analysts surveyed by FactSet expected, on average, earnings of 79 cents per share on revenue of US$3.98 billion. Analysts typically exclude one-time items from their estimates.

Medtronic has struggled to maintain earnings growth amid sluggish sales of its two leading products: heart defibrillators and spinal implants. Sales for implantable cardioverter defibrillators, or ICDs, fell eight per cent on a constant currency basis to US$697 million, as procedure volumes fell in the United States. ICDs treat rapid heartbeats.

Sales from the company’s spinal business fell to US$825 million from US$829 million, even though international sales in that segment grew seven per cent. That business took a big publicity blow earlier this year when a medical journal alleged that Medtronic downplayed the risks of its InFuse spinal repair protein and failed to disclose millions of dollars in payments to the authors who wrote the initial studies of the product.

Medtronic’s total costs and expenses also climbed 11 per cent to US$3.03 billion.

The company said international sales accounted for 46 per cent of its revenue, and emerging markets sales grew 30 per cent as reported or 25 per cent on a constant currency basis to US$408 million.

Medtronic reaffirmed the fiscal 2012 forecast it made in May. The company expects earnings of US$3.43 to US$3.50 per share on revenue growth of one to three per cent, or to US$16.1 billion to US$16.41 billion.

Analysts expect, on average, US$3.46 per share on revenue of US$16.57 billion.

The quarter marks Omar Ishrak’s first as Medtronic chairman and CEO. Ishrak, former head of General Electric’s health care unit, joined the medical device maker in June.

Ishrak is only the second CEO in Medtronic’s 60-year history to come from outside the company. The last time the company was led by a non-Medtronic executive was in 1985, when Pillsbury executive Win Wallin became CEO and chairman.

Company shares climbed 2.3 per cent, or 72 cents, to US$31.90 in premarket trading.