Boston Scientific (NYSE:BSX) is fighting against an atrocious economy, product recalls and everyone’s all time favourite high debt levels. The economy well what can you say. Product recalls – isn’t that normal in this industry? Why wasn’t it budgeted for. High debt levels are usually dealt with in one spectacular manner. Divestitures of assets and or lines of businesses. What can we sell quickly to some unsuspecting schmuk and pull a lot of cash out of it.
Oh lets not forget that ever popular strategy “cost cutting” BSX has cut costs which usually means whacking people. Total operating expenses dropped from around 40% to 26% which is huge. However some point out that managers can now include more in cost of goods sold which allows you to hide hide hide.
Then there is the ever treacherous good will valuations. Now understandably this is not a real estate company with bricks and mortar. Drugs are intellectual property which always has a certain level of goodwill attached. On July 26, CEO Hank Kucheman revised goodwill estimates downward by over $3 Billion.
Some say these are non cash accounting tricks. Others say this is destruction of shareholder wealth. You buys your ticket and takes your chances.
George Gutowski writes from a caveat emptor perspective. Follow him on twitter @financialskepti