There would be no reason for BSX management to settle these lawsuits now unless, it knows that its revenues are looking 20% better and expenses are going lower due to consolidation. They spoke of Sales Increase in early January at the Brokerage Health Conf. They also spoke of reducing risk. With better revenue numbers and ABT slaes now a go. We shall see!
The big positive is $100 million in free cash flow each month. Each and every month. In a couple of years their debt will be reasonable and who knows they may even pay a dividend in 2012 or 2013. Then you will see this stock get back into the 20's or maybe even higher.
The word 'dividend' is not in the BSC board's glossary of terms. They have stood fast over the years saying that they can do more for stakeholders by reinvesting the profits.
This point has been sadly proven to be very, very wrong. What we've seen is that it appears as though they really don't care much about the stakeholders.
Before purchasing Guidant, they let the real prize (SJM) slip off the bargaining table.
What is the amount of that lawsuit anyway? The JNJ settlement
was for multiple suits. Does OrbusNeich have as huge a
suit against these boneheads as JNJ did? You may for certain
assume these losers will either not contest a settlement or
lose a huge case and a wad of money. Then pay out huge
performance bonuses. What a company.
Where did you get the 20% revenue increase? Are you aware BSX had to recall Cognis and Teligen (CRM's latest and greatest products) in December? Are you aware that ABT is building their DES market share? Are you aware BSX has not launched any significant new products in 2009 besides Cognis and Teligen, which were eventually recalled? Are you aware Lancet journal recommended discontinuing use of BSX's Taxus stent in favor of ABT's Xience stent? Based on these facts, I don't see any justification for 20% revenue increase anywhere.
Expenses will be higher, since mgmt will be rewarding themselves a special Valentine's Day Bonus for settling with JNJ. Also, BSX had to pay JNJ around $700 million around Q4 09, on top of the $1.7 billion they have to pay JNJ this year. So for 2009 and 2010, BSX will be paying JNJ $2.4 billion, while BSX has free cash flow of $100 million a month. Essentially, JNJ will be receiving all of BSX's FCF from 2009 and 2010.
What I said was clear. BSX Management could have made statements after the CC on 2-11-2009 or during it. Big Players and educated CEO's use strategy in timing their business announcements, it takes some skill and these days they all know the game. So just being logical, the JNJ settlement was announced early, due to the CC will show more then likely show improved sales revenues and better EPS. Making, 1 billion a none event for a firm that may earn $10 billion in sales in 2010. The highest ever!
The recall that you are speaking of only affects devices implanted subpectorially and greater then 95% of devices are implanted subcutaneously. The recall is really a none issue. Cognis and Teligen are simply the smallest, thinnest, longest lasting, most energy efficent devices on the market today. Those are all facts if you do your homework. Plenty of documentation around to support these facts.