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Abbott Laboratories Message Board

  • redferrariman redferrariman Nov 10, 2010 11:40 AM Flag

    Whats up with their debt? Its huge! Or am I reading the statistics page wrong?

    GLTA and I welcome any and all posts. Please enlighten me on this concern.

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    • Hello,

      Browsing through the third quarter Abbott 10-Q filing reveals a few interesting facts:

      1)Share repurchases

      Abbott's SEC form 10-Q shows that there were 1.546 billion shares in September, 2009, and 1.545 billion share today. Therefore, share repurchases have had a negligible effect on shares outstanding, perhaps because of share issuance for compensation.

      2)Research and development expenses:

      These jumped from $675 million to $1,079 million in the third quarter. Management states that Facet Biotech corp, the acquisition in the second quarter, was engaged in early and mid-stage pharma development of a biologic for MS, and a substantial portion of the acquisition cost has been allocated to research and development expense.

      3)Solvay acquisition: pretax losses of $365 million in the third quarter were attributed to Solvay, including acquisition, restructuring, and integration expenses. I think this means layoffs and buyouts for redundant Solvay management employees....

      4)Post employment obligations: These increased from $5.2 bn at year-end, to $7.4 billion September 30. I assume these are buyout expenses for redundant employees from Solvay.

      5)Foreign exchange gains and losses: Abbott reported a small loss, about $21 million, from forex for the quarter, and a tiny gain, about $8.2 million for the year. This is despite the fact that more than 50% of Abbott sales are in foreign domiciles, and the US dollar has been very weak during 2009. I assume the small effect of forex on Abbott results from hedging.

      I use a lot of Abbott products and think they're pretty good. I thought the quarterly filing was confusing because of all the one-time expenses, and financial "noise" from the acquisitions.

      I have seen some analysts criticize Abbott for making too many acquisitions. Not sure if this criticism is valid.

      regards,

      puzzled48

    • jeffrey_gardner@verizon.net jeffrey_gardner Nov 14, 2010 10:15 AM Flag

      Regarding the comments made about cash flow, doesn't the statement show that they have been selling stock, not purchasing?

    • i would like very much to have the info, thanks

    • This is my first post to the message board. Disclosure--I am long ABT and own a significant position as a % of my overall portfolio.

      For those concerned about the debt, look at the WACC or weighted average cost of capital. Theirs is 4.73%, compared with JNJ which has a WACC greater than 7. (There is a website that automatically calculates the WACC via SEC reports. Just plug in the ticker. http://thatswacc.com/ ) That is pretty significant and just shows me that they are using low interest financing to acquire good long term businesses that will add to their growth. The fact that they are using cash financing and not stock tells me they think their stock is at least fairly valued if not discounted.

      I do believe that the main reason for the 2% drop on Friday has something to do with the JNJ lawsuit regarding Humira. One can take a closer look and see that A)the suit took place in a highly litigous region, and B)that JNJ would continue to seek a % of the profit from Humira. I am worried about B but as they continue to diversify, their income will have less to do with Humira in the coming years.

      I am a buyer anywhere under 51. If anyone wants to see a spreadsheet I made detailing what I think is a good value, just e-mail me.

      Zach

    • I feel some large funds are selling.

      I agree the high debt level is a concern, which wre driven higher by the Solvey purchase, and the high possiblity of loss of some $2 billins to JNJ.

      However, the no. 1 concern for ABT is their long term picture. They do noit seam to have drivers for the long term. Many of their newer roducts are not pannig out. The Sovey purchase was supposed to help them with the combination pill with Crester of AZN, but their drug application is having a lot of hard time with FDA, I think.
      The recent diet drug withdrew has not helped either.

      Next week is iption expiration. I do not know how this will play out. I tried to buy some last week, but got quite burned due to the 5% drop in the shares in a single week. Another problem is ABT cannot buy the shares even when the shares are this checp, since their balance sheet is not as strong.

    • Yeah, and it's all from acquisitions and is out at 3.5% for 40 years! I hate it when the shorts try to spook the market. Some other idiot posted that ABT sold a business unit the other day. Surely there must be a board where shorts can entertain each other!

    • 19 billion and climbing, if shares fall below 48 i'm out.

 
ABT
41.59-0.31(-0.74%)Sep 30 4:00 PMEDT

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