National Employee Morale Day At Boston Scientific (BSX)

Boston Scientific (NYSE:BSX), the worst run of the large medical device and pharma firms based in the US, announced an operating loss for the fourth quarter of 2009 of $1.23 billion. The company’s guidance was poor which pushed shares down 7% in active trading to $7.61. The bad news was on top of an announcement last week that Boston Scientific will pay Johnson & Johnson (NYSE:JNJ) $1.7 billion to settle patent disputes. The New York Times wrote “The figure appears to be the largest sum ever paid to resolve patent litigation over a medical device.”

Boston Scientific also announced that it will cut 8% to 10% of its staff. The firm said the moves will save between $200 million and $250 million over the 2010 to 2011 period. It is the latest of a number of job cuts since the company bought Guidant in 2006.

It is difficult to see how CEO Ray Elliott will keep his job in the process. Elliott has only been with the company since last year, but the stock is down 40% during the last eight quarters. Elliott’s turnaround program has been a failure.

A great deal of the blame also goes to Pete M. Nicholas, the company’s co-founder,  who has been Chairman of the Board since 1995. Boston Scientific shares traded for $12 in 1995, 40% more than the share price is now.

Douglas A. McIntyre