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  • newyorksalute newyorksalute Oct 4, 2012 9:53 PM Flag

    Recent layoffs at BSX

    Its true that revenues have been flat at BSC for the past few quarters, but you also have to realize that the Obamacare tax on medical device companies kicks in on January 1st, 2013. After that point, BSC will be writing $10,000,000 checks to the US Treasury EVERY single month. Thats in addition to their normal tax rate. Thanks to Obama and those that voted for obamacare (Klobuchar, Franken), the Twin Cities medical device companies are forced to either cut staff or offshore products to try to make up for lost revenue that could be going to R&D. The company will not attribute these layoffs to Obamacare, because most companies just do not want to call him out. Be smart when it comes time to vote in November. Know who has your back, who is protecting your surely isn't the democrats.

    Sentiment: Buy

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    • In the case of BSX, it's the ineptitude of executive "management" on how to run a company, and the need to inflate their "performance bonuses" that drives layoffs. Obamacare is only an excuse for layoffs in the case of BSX, not the reason. Well-run medical device companies that have diversified and growing international sales are doing fine and will not take much of a hit from Obamacare, since Obamacare only taxes US sales of medical devices. Hence even foreign companies with overseas plants that sell foreign-made devices in the US will take a hit from Obamacare as well. BSX has moved most production offshore to Costa Rica and Ireland, but layoffs have started in Ireland. BSX revenues have been dropping faster than a dress on prom night for the past 4 years (even before Obama was elected), and the only way management can boost EPS is through layoffs. BSX stock price has crashed from $45 to $5 over the past 8 years. BSX has neglected their R&D pipeline since 2006 when they got the FDA Corporate Warning letter, and they have fallen years behind their competitors in terms of technology. Even with the warning letter lifted, it was a mortal blow to BSX in terms of technological advancement, and you see companies like Edwards and Medtronic with commercialized heart valves, Abbott with the fully-absorbable drug eluting stent commercialized in Europe, and JNJ walking away from the Guidant deal unscathed, while BSX took a $28 billion hit that they can never recover from. Believe me, Nicholas, Abele, Tobin, Elliott, and now Kucheman and Mahoney have done more damage to BSX to the tune of tens of billions of dollars, dwarfing a potential $100 million Obamacare tax.

      • 2 Replies to jbl111
      • jbl111 is correct in his accessment. The only thing I would say is JNJ is not unscathed as they lost their entire Cordis coronary division because they didn't get OTW patents from Guidant. If the tax hit is actually $10mil/month then the CEO's salary alone would cover the tax bill for 1/4 of the year. That sounds like the problem to me. How can this place ever be fixed if the top managers make multi-millions for horrendous performance? This is a case study on years of mismanagement at the top and not on Obamacare. I have another bad feeling about this quarter as Medtronic is eating into DES in US and price continues to deteriorate.

      • Hey jbl111, if you're going to copy from someone, please give credit instead of plagiarizing

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