Pharmaceutical company GlaxoSmithKline reported this morning that third-quarter net income slipped to 1.35 billion pounds, or 23.5 pence per share, from its year-ago results of 1.43 billion pounds, or 24.4 pence per share. Sales also slipped, dropping 3% to 5.48 billion pounds. Analysts were expecting GSK to report net profit of 1.32 billion pounds and 24.44 pence per share in earnings, along with sales totaling 5.65 billion pounds.

GSK's pharmaceutical sales suffered a 2% slide during the quarter thanks to increasing generic competition from the U.S., along with a 38% drop in Avandia sales. The company asserted that it's still on track to meet its 2007 profit guidance, with earnings per share expected to grow between 8% and 18% for the year. Cost-cutting moves, including layoffs, will be implemented to keep GSK on target but Chief Executive Jean-Paul Garnier didn't specify the exact number of jobs that will be eliminated. All told, the firm plans to take 1.5 billion pounds' worth of charges in an attempt to save 700 million pounds by 2010.

After adding 2.6% in yesterday's session, GSK shares have slipped in overseas trading this morning. The equity's progress has been capped by its bearishly crossed 10-month and 20-month moving averages since May, and GSK shares have spent the intervening months stuck in a channel between the 51 and 53 levels.

Regardless of the stock's recent underperformance, option traders were feeling optimistic ahead of this morning's report. GSK's Schaeffer's put/call open interest ratio of 0.82 ranks lower than 72% of other such readings taken during the past year. Peak call open interest in the front-month series lies at the 52.50 strike, which is now fractionally out of the money.