DUBLIN (Reuters) - Shares of Elan Corp. plunged to their lowest level in five years yesterday after the Irish drug company said its fourth-quarter earnings fell 84 percent and warned its 2002 profit will be lower than expected.

Elan's shares fell $15.10, or 50 percent, to close at $14.85 on the New York Stock Exchange, after hitting an intraday low of $14.25. They fell 43 percent to 19.50 euros in Ireland.

Dublin-based Elan, which makes the muscle-relaxant Myobloc and skin ointment Aclovate, said profit in 2002 could be as much as 34 percent lower than expected because of the delayed launch of its migraine drug Frova and its painkiller Prialt.

"This is an unmitigated disaster," said David Maris, an analyst at Credit Suisse First Boston.

The profit warning comes less than a week after Eland's shares were battered following a report in the Wall Street Journal questioning how the company accounts for revenue from joint venture research partnerships, many of them based in Bermuda. Elan, which denied any wrongdoing, nonetheless this quarter included in its earnings the results from two units not previously consolidated in its final results. Donal Geaney, Elan's chairman and chief executive officer, defended Elan's accounting practices and dismissed the Journal's report as "a rehash of old news about matters that have been fully discussed."

By including the units, 2001 net income was reduced to $211.4 million, or 59 cents a share, from a previously reported $47.7 million, or 97 cents a share.

"We think when investors get through the details you'll find out shenanigans have accounted for the majority of Elan's earnings," Maris said.

The company's net profit in the latest quarter fell to $8.5 million, or two cents a share, from $54 million, or 15 cents a share in the year-earlier quarter, mainly due to charges from writing off overvalued assets.

Revenue rose 15 percent to $487.6 million from $424.4 million in the quarter.

"The numbers aren't looking great at all," said analyst Ian Hunter of Dublin's Goodbody Stockbrokers. Elan said it expects to earn between $1.55 a share and $1.65 a share in 2002. Analysts had expected the company to earn about $2.35 a share, according to Thomson Financial/First Call.

Analysts criticised the level of Elan's disclosure.

"There's not enough visibility or transparency about the company's sources of revenue," said Thomas DesChamps, an analyst at Mehta Partners. "We need more clarity."

The company said $250 million of its expected revenue in 2002 will come from drugs it plans to acquire.

"We are uncomfortable including the "to be acquired" product potential in our forecast, which brings us to revenue and earnings well below the company's guidance," said Angela Larson, an analyst at Salomon Smith Barney, who downgraded the company's stock to `neutral' from `outperform,' in a report.

The company said it expects 2002 revenue of $2 billion to $2.1 billion, up from $1.9 billion in 2001. Of that, revenue from sales of products is estimated at $1.6 billion to $1.7 billion.

Excluding charges, earnings per share for the final quarter of 2001 were 56 cents, in line with estimates. Elan suffered a setback earlier this month when it was forced to halt mid-stage clinical trials of its Alzheimer's vaccine after four patients fell sick. Elan said it is investigating the problems together with partner American Home Products Corp.

Elan said it plans to launch Frova, developed with British biotech firm Vernalis Group Plc, in April, rather than in the first quarter as planned. Prialt will now undergo an additional late-stage clinical trial, instead of being launched in the second half of 2002.

"While these were small products and not overly meaningful to earnings, in the face of increased investment spending, the loss of revenue contribution is felt," said Larson.

The company, which analysts say needs a big partner to co-market the drug, said it expects to finalise a co-promotion deal during the first quarter. Although the bulk of Elan's shares are traded in New York, the company is important to Irish investors because it accounted for around a quarter of the ISEQ index of leading Irish shares before its recent plunge.

Its performance frequently determines whether the direction of the market as a whole. Last July Elan's stock was trading at more than 70 euros in Dublin and its market capitalisation was twice the size of any other Irish firm. Last week it lost its position as Ireland's largest company by market capitalisation, overtaken by Allied Irish Bank .