* Q3 EPS, excluding items, matches $0.53 forecast
* Q3 sales $13.98 billion vs forecast of $14.64 billion
* Authorizes another $10 bln in share repurchases
* Lowers high end of 2012 forecast
* Shares fall 1.4 percent
Nov 1 (Reuters) - Pfizer Inc on Thursday posted quarterly revenue well below Wall Street expectations, as sales of the pharmaceutical company's Prevnar pediatric vaccine disappointed and emerging market revenue dropped sharply.
A sharper-than-expected decline for Lipitor, the cholesterol fighter that began facing cheaper generics late last year, also hit revenue. Global sales slid 16 percent to $13.98 billion, well below Wall Street expectations of $14.64 billion.
Excluding special items, Pfizer earned 53 cents per share, matching the average analyst forecast, according to Thomson Reuters I/B/E/S.
Pfizer in recent years has failed to produce many big-selling new drugs. But company shares have risen 13.5 percent in the last year, outperforming 11.5 percent gains for the drug sector, largely on optimism for its new treatments for cancer, blood clots, arthritis and other diseases.
Investors also have applauded sharp cost cuts, including to its research budget, and the recent decision to sell its baby formula business to Nestle SA for almost $12 billion. That deal is slated to close in the first half of 2013. The company has a history of buying back shares, which has kept investors onboard.
Pfizer on Thursday authorized an extra $10 billion in share repurchases, given the planned sale of the nutritionals business. The company has repurchased $5.9 billion of common stock so far this year of an an earlier $10 billion authorization.
Asked if Pfizer's recipe of new medicines, cost cuts and share buybacks was sustainable, Barclays analyst Tony Butler replied: ``I'm not so sure.''
He said his main concern is whether Pfizer can introduce enough lucrative products to restore revenue growth, amid Lipitor's plunging sales and looming generic competition or declining royalties.
``If you don't make enough widgets, you can't be successful in the long term,'' Butler said, adding that cost cuts have been a more proven prowess at Pfizer than development of drugs with big sales.
Lung cancer drug Xalkori and kidney cancer treatment Inlyta, new drugs that had impressive results in clinical trials, posted disappointing quarterly sales of $38 million and $30 million, respectively, said Butler.
But company Chief Executive Ian Read said the pair of cancer drugs has potential, while other medicines -- including an experimental blood clot preventer called Eliquis -- would prove themselves over time.
``You don't fix the innovative core of a pharmaceuticals business in two years,'' he said in an interview. He noted that operations of the New York-based drugmaker have not been significantly affected by Hurricane Sandy.
The largest U.S. drugmaker earned $3.21 billion, or 43 cents per share, in the third quarter. That compared with $3.74 billion, or 48 cents per share, in the year-earlier period, when the company recorded a $1.3 billion gain on the sale of its Capsugel business.
``Like many others in the third quarter, Pfizer was weak at the revenue line, missing (forecasts) by 5 percent,'' Jefferies & Co analyst Jeffrey Holford said.
Revenue from emerging markets - countries whose fast-expanding economies are a mainstay for Pfizer growth - fell 2 percent to $2.39 billion as the stronger dollar cut into the value of sales. By contrast, emerging market sales had jumped 8 percent in the prior quarter.
Although Pfizer has hitched its future largely to sales in developing markets such as China, India, Eastern Europe and South America, sales are highly variable there because of fluctuating interest rates and a range of regional factors.
Pfizer Chief Financial Officer Frank D'Amelio said the company expects annual emerging market sales to grow in the ``high-single-digit'' percentage range in the next few years, fueled by overall growth in healthcare spending.
Sales of Prevnar 13 fell 14 percent to $868 million, while sales of its older Prevnar 7 vaccine dropped 17 percent to $81 million. The widely used vaccines, obtained through Pfizer's merger in 2009 with Wyeth, are now Pfizer's second-biggest-selling franchise.
Prevnar, used to prevent infection with pneumococcal bacteria that can cause pneumonia, ear infections and other problems, logged especially sharp declines in the United States and developed Europe.
D'Amelio said that was because children last year were given a one-time extra vaccination to afford them the same protection as Prevnar 13, which protects against 13 strains of pneumococcal bacteria. The older Prevnar protects against 7 strains.
``That was a one-time opportunity,'' D'Amelio said. Pfizer also cited ``minimal'' demand by adults for Prevnar 13.
Lipitor sales plunged 71 percent to $749 million. It had been the world's biggest drug until its U.S. patent lapsed in late November, opening the floodgates to cheaper generics.
Pfizer said it now expects 2012 earnings of $2.14 to $2.17 per share, from its prior view of $2.12 to $2.22 per share.