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AmerisourceBergen Corporation Message Board

  • sharemanoftheboard sharemanoftheboard Jan 10, 2004 9:53 AM Flag

    Interesting !!!!!! Newspaper Article

    Philadelphia Inquirer Article. (No, not the Enquirer, the Inquirer.) I will post it on the next message. Here are my thoughts on the topic for what they are worth.

    Interesting comments from the VA seriously contradict Yost and ABC. Either ABC flat out lied, or CAH bid almost the same as MCK. Also, it is VERY important to note that ABC "was" the incumbent and still could not prove that their Service was better. That is a recurring theme. Remember the Tenet deal. It was based on the POOR service from ABC. More will certainly follow. ABC is in trouble and MCK and CAH are kicking them in the groin while they lay on the ground.

    Happy Investing !!!!!

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    • << might not try to read into Yost's comments CAREFULLY; I believe I might rather take his comments at face value & let's see what happens in the next quarter.>>

      If you had listened to Yost's comments carefully, asshole, then you would be better informed and not make idiotic comments.

      Welcome to Business 101. How your stock MCK doing? Down again? How can that be?

      Welcome to your Pyrrhic victory.

    • You were doing well, I thought you had even shown some intelligence in your responses until you started getting defensive not too long ago. Here's Business 101 - Don't be an asshole. I might not try to read into Yost's comments CAREFULLY; I believe I might rather take his comments at face value & let's see what happens in the next quarter.

    • <<Adios!>>

      Hasta Luego!

    • If you like ABC, then, you may also want to check out HGRD !

      Sales & revenues of HGRD are growing.......

    • gretta_van_sustention gretta_van_sustention Jan 12, 2004 12:47 PM Flag

      Glad to see you have it all figured out cause I sure as hell can't make sense of it. Too many other stocks that trade more rationally than MCK & ABC. Adios!

    • >God help ABC if MCK is going to expand their bottom line on the VA deal. <

      MCK "will" expand their botom line. There is almost zero doubt about that. Even Yost would agree! It is the implications of the pricing and what it means for future margins and return on invested capital as other contracts come up for bid that is the issue. That seems to be beyond your comprehension. MCK set a precendent of accepting lower margins. That is why the whole industry suffered. ABC the worst because it lost the bid. CAH because it is a major player. And MCK because it showed a lack of discipline to win.

    • I am most elated to see some intelligence grace
      this message board. From reading your previous posts, it's obvious that your business
      savvy is intact, and you are well informed
      and knowledgable about this latest "snafu".
      I congratulate , and thank you.

    • <<A little selling could push many into deciding to dump shares and drive ABC into the 40's.>>

      Yeah, and a little buying could drive into the 90s.

      What are you smoking sdowney1? You should at least share.

    • gretta,

      You are as clueless as sharewoman. I wonder if you are the same person?

      <<The McKesson earnings call will be the short play trigger on ABC in my opinion. God help ABC if MCK is going to expand their bottom line on the VA deal. >>

      Increasing profits is not the question. Increasing profits sufficiently is the question. It's all about getting sufficient returns on invested capital.

      This is like hypothetical case of GM adding an extra $100 to their bottom line by supply NYC Cops with their cars. For all the cars, and a mere $100? They'd be better to walk from the deal. They ain't getting sufficient returns.

      Welcome to Business 101.

    • Posted on Tue, Jan. 06, 2004

      Losing firm hits winner's VA bid
      AmerisourceBergen called McKesson's low pricing "a mistake." The rival drug wholesaler defended it.
      By Linda Loyd
      Inquirer Staff Writer

      AmerisourceBergen Corp. went on the defensive yesterday, telling investors that rival McKesson Corp. "made a mistake" in its low pricing of a $3-billion-a-year U.S. government contract to distribute prescription drugs to veterans hospitals.

      The U.S. Department of Veterans Affairs had been one of AmerisourceBergen's largest customers, representing about 6 percent of its 2003 revenue of $49.7 billion.

      Chesterbrook-based AmerisourceBergen, one of the world's largest drug wholesalers, had a five-year contract, through March 31, to supply pharmaceuticals to the Veterans Affairs department.

      On Wednesday, the VA announced it was switching drug wholesalers, starting April 1, and awarding an eight-year contract valued at $23 billion to $24 billion to rival McKesson, which is based in San Francisco.

      "We believe the switch was at least partially driven by McKesson's aggressive pricing," Bear Stearns & Co. Inc. analyst Raymond G. Falci said. McKesson's bid was probably 20 percent below competitors AmerisourceBergen and Cardinal Health Inc., Falci said in a report Friday.

      After losing the contract, AmerisourceBergen lowered its 2004 earnings guidance last week to $4.10 to $4.20 a share from the previous guidance of $4.50 to $4.60.

      "AmerisourceBergen clearly has some challenges ahead," chief executive officer R. David Yost said on a conference call with investors.

      "We will continue our disciplined approach," Yost said. "AmerisourceBergen will not launch a price war. We will remain disciplined. We think McKesson made a mistake in the very low bid they presented. It's not in the best interest of their shareholders."

      McKesson officials disagreed. "It was a unique opportunity with a premier entity, and we are delighted to have won it," said Kate Rohrbach, McKesson's vice president of corporate communications. "We are comfortable with our pricing, and we think it will return value to our shareholders."

      AmerisourceBergen shares, which fell $9.50 in the two trading sessions before and after New Year's Day last week, closed up $1.83, or 3.39 percent, at $55.83 yesterday on the New York Stock Exchange. McKesson shares closed down 64 cents, or 2.07 percent, at $30.22.

      The Veterans Affairs National Acquisition Center, which administers contracts to VA medical centers, said McKesson's bid, although lower, was competitive with the others.

      "The major suppliers were in the same neighborhood in their pricing," said George T. Patterson, executive director and chief operating officer of the VA National Acquisition Center in Hines, Ill.

      "It was the best of the three - enough that we couldn't ignore it - but there was not a huge pricing discrepancy," Patterson said.

      "The solicitation was judged on three factors: on past performance, technological capabilities and on price. Price was 50 percent of the award," the VA official said.

      Yost said: "The loss of the VA business was both a disappointment and a surprise. We were truly confident we would retain the business."

      The company said it would address the lost business through debt reduction, acquisitions, or new distribution business, but would not accept contracts that were unprofitable for shareholders.

      "If we had to do the whole thing over, I'm not sure we would do it differently," Yost said. The price spread "was so big. It's not like we missed it by a couple basis points."

      He said the impact on earnings would be greater in the last half of 2004 than in the first half of 2005. The company's fiscal year ends Sept. 30.

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