(Reuters) - Nutrition and weight loss company Herbalife Ltd estimated fourth-quarter profit and sales above analysts' expectations, sending its up 4 percent in premarket trading.
The company, whose stock has fallen 18 percent since the start of the year, also increased its share repurchase program and said it planned to raise $1 billion through a convertible note issue.
The announcement of better-than-expected results is a setback for activist investor William Ackman who said last week that he was sticking by his $1 billion short-selling bet that Herbalife is running a pyramid scheme.
Big-name investors including Carl Icahn and George Soros have taken stakes in Herbalife, lining up against Ackman. Icahn is the company's biggest shareholder with a stake of 16.8 percent as of September 30.
Earlier in January, U.S. Senator Edward Markey called on the Securities and Exchange Commission and the Federal Trade Commision, to investigate the company.
The company has denied that it is running a pyramid scheme - an unsustainable business model that focuses more on recruiting salespeople than on selling to outside customers.
Herbalife, which sells products through a network of independent distributors, on Monday estimated adjusted earnings of $1.26-$1.30 per share for the fourth quarter ended December 31.
Analysts on average expect a profit of $1.17 per share, according to Thomson Reuters I/B/E/S.
The company said fourth-quarter sales rose about 19.8 percent, which translates to about $1.27 billion and beats the average analyst estimate of $1.22 billion.
Herbalife said the rise in sales was due to a 12.7 percent increase in volumes, which the company calls volume points. An increase in volume points indicates higher sales.
The Los Angeles-based company forecast current-quarter profit of $1.24-$1.28 per share, saying that the weak Venezuelan bolivar had hurt earnings.
Analysts were expecting a profit of $1.40 per share.
Herbalife reaffirmed its 2014 adjusted earnings forecast.
The company increased its share repurchase program to $1.5 billion from $1 billion, and said it planned to offer $1 billion in convertible senior notes due 2019 to fund the buyback.
Herbalife's shares were up 3 percent at $66.50 in premarket trading. They had risen about 84 percent over the past year up to Friday's close on the New York Stock Exchange.
(Reporting by Maria Ajit Thomas in Bangalore; Editing by Savio D'Souza)
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