Jim Cornelius: Look, Ma. No Drugs, No Cash
4 CommentsBy Ed Silverman // February 1st, 2008 // 7:50 am
Question: What does Bristol-Myers Squibb make besides drugs?
Answer: Bad investment decisions.
As you know, the drugmaker took a $275 million write-off to reflect a sharp drop in the value of debt-related investments, including residential and commercial loans linked to sub-prime mortgages.
“Investors can now add to the list of questions to ask a pharmaceutical company in addition to asking about the studies and pipelines and patent expirations: What is your sub-prime exposure?” Carol Levenson, director of research at Gimme Credit, wrote in a note to clients. The write-down “speaks poorly for the company’s stewardship of its cash.” And she predicts more to come.
Source: The Los Angeles Times
Hat tip to Pharmagossip
Virtual Memories
Maybe it’s just me, but I’m not sure it’s wise to seek investment advice from a company called “Gimme Credit.”
Pharmalyst
GimmeCredit: Company name not withstanding, they are “on the money”. Investing money in a repo deal for a little extra cash is one thing for big pharma but investing in sub-prime? Gimme a break! Time for BMS to hike its dividend rather than make such investments. Investors can put their monies at Citi or Merrill if they want to lose money in the structured products market. I think this stems from Jim Robinson (ex CEO of Amex during Nabisco LBO) and other financial types who seem to be running the show at BMS these days
Paul
I agree 100%. A company like BMS has no business being in that market. It’s just a money game at BMS now as the company tries to jockey to get itself on the block. But a debacle like this just a few months after the company signed a $500 million settlement and shortly before that having to plead guilty for misleading investigators in the Apotex-antitrust probe undermines confidence still further. When Dolan was pushed out someone should have cleaned house. And the OUTSIDE search for a CEO should have been completed. BMS needs some genuinely new leadership. And CFO Bonfield should step donw immediately. Shareholders should not stand for this kind of incompetence.
BLD
This company has simply destroyed itself in the last 12-15 years. The downslide began with the hiring of Rick Lane, a move that cost them dearly, continued with the failure of drug after drug after drug, and has culminated in a series of ill-advised financial moves. I worked for this company a long time ago, when it actually had some drugs and some clout, but now it’s a complete disaster. When Plavix comes off patent, they’re done.