Will the last one to leave the building please turn out the lights?
Boston Scientific (BSX) will apparently ax up to 3,400 people. It appears that CEO James Tobin and his co-founders Peter Michael Nicholas, Jr. and John Abele will not be among them. But, they should be.
BSX is a wreck. After buying medical device-maker Guidant for $24 billion, BSX took on a load of debt that it is having trouble paying back According to The Associated Press "Boston Scientific’s credit standing among the three major ratings agencies has recently fallen into junk bond territory, creating pressure to release cost-cutting specifics."
The company’s critical stent business is being hammered by on-going reports that drug-coated stents can cause clots and heart attacks. Cardiologists are shying away from using them and have turned to drug-based treatments instead.
BSX shares were at $27 in December 2005. They are off over 4% today to $14.41.
The company still needs to convince Wall St. that it can pay back all of that money. It could bring in capital by selling shares of Guidant in the public market.
Douglas A. McIntyre
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