Pj568

Can We Get Back to Stock Picking Now?

Ryan,

"And sure, let's just get rid of GAAP and start using EBITDA instead"

You missed my sarcasm. BSX is already half way there as they adjust earnings for standard amortization.

Can We Get Back to Stock Picking Now?

Wondering why a decrease of 28M in operating earnings is considered a "strong quarter"? Their increase in actual earnings was due to less "other inc/exp" recorded of 82M. On a GAAP basis they did make 10 cents which was up from 7 cents.

Writers don't even know what earnings are being adjusted for and don't care if its proper or not. The 20 cents/share referred to is due to BSX adding back 7 cents of standard amortization exp. The next step could be to start reporting EBITDA and forget GAAP altogether.

Boston Scientific Poised to Attain Investment Grade Rating

This reminds me of a recent internet posting (that used humor)

"Obama to meet with small businesses - GE, Pfizer, Chrysler, Citigroup and GM to discuss the Stimulus Package."

Wall Street Breakfast: Must-Know News

Boston Scientific (BSX): Q1 EPS of $0.19 beats by $0.07. Revenue of $2.0B (-1.8%) in-line. (PR)

Don't you just hate it when the GAAP loss gets in the way of those good profit numbers?

Boston Scientific Should Not Only Survive, But Thrive

I've yet to see any signs on a turnaround indicated or rebound in its core markets. If you quote the consenus for EPS then I guess you would go with their consenus revenue of 8B which is the same as 2008 and 350M less than 2007 revenue.

Also they'll probably take on additional debt during the year as they have to settle the 750M JNJ & 250M Medtronic patent litigation they lost during 08. I think they posted bonds and have yet to actually pay anything. Staying on the sidelines here.

Boston Scientific Should Not Only Survive, But Thrive

The decline from the 40's started with a 780M patent settlement in 2005 which also dropped their future margins by a couple of percent. In addition to the acquisition debt there was also the 40% stock dilution for shares issued to Abbot. Before the acquisiton they generated sales of around 1.10 for each dollar of fixed assets. Since then it has run around 35 cents for each dollar invested which supports questioning the value of intangibles. Working capital seems to be OK but can't afford further adverse events. The cash flow number mentioned doesn't include normal CapEx. Even if they achieve the 1.2B in operating cash flow it puts them on equal footing with 2004. One needs to do their own research on this one as the company only talks about adjusted earnings but never earnings without that qualifier.

Finding an Edge with Boston Scientific

Don't get me wrong, I think BSX is in serious trouble with no easy out. When I said management thinks it was a great acquisition, it was to show how deluded they are.

Finding an Edge with Boston Scientific

They did recognize a 2.7B goodwill impairment during the 4th quarter but it seems like only a partial acknowledgement of their goodwill problem. Before their disasterous acquisition, they generated sales of $1.13 for each dollar of long term assets; post acquisition it is $.33 of sales per long term asset. To top it off, BSX still believes it was a great acquisition, or so they say in public. If they mismanage their limited working capital they will be seeking relief either in the courts or thru some really expensive/dilutive equity raising pretty darn quickly.

Wall Street Breakfast: Must-Know News

Many of the numbers referenced above appear to be adjusted and not actual. WB and BSX are two that jumped out as being off. One would expect adequate disclosure from the SA Editor about the numbers being referenced. Constantly reporting and discussing adjusted numbers is a sign of weakness that shouldn't be ignored.

Boston Scientific: Good Valuation, But Technically Shaky

I suspect that there are few, if any, bigger fools in todays market. BSX paid 14B for each 1B in annual sales realized post acquisition (7 cents of sales for each dollar spent). Hard to believe they can still justify a carry value of 24B. Don't know when or how much, but I expect a substantial write down that could eliminate book equity. Per the 10-K, impairment testing takes place during the 2nd quarter. Even if no write down is announced next week, I can't imagine a true value anywhere close to the book value.

Boston Scientific Bundles Stents with Defibrillators and Ultrasound

I find it surprising that BSX is still regarded as a viable economic force. Their two primary business lines, CRM and Stents, continue to decline in a weak economy. Their balance sheet appears grossly distorted and unrealistic following the Guidant acquisition. They report 31B in assets with 15B in equity while the economic reality may be closer to a zero equity position. The failed overpriced acquisition plus decreasing sales from existing lines leaves them highly exposed to any misstep managing their existing working capital which probably can't be replaced without incurring highly expensive and dilutive events.

A simple indicator of an overpriced balance sheet value is that prior to the acquisition each dollar of net long term assets generated 1.10 in sales, post acquisition that number has fallen to 32 cents without any signs of recovery.

It seems incomprehensible that an impairment has not been recorded at anytime in the two years subsequent to acquisition. I wonder why markdowns in other sectors have yet to be realized here.

Boston Scientific Corp. Q1 2008 Earnings Call Transcript

A couple of comments.

They continue to talk adjusted earnings and have been for the last three years. If they were doing well they could just talk actual instead of adjusted. How many more years will they be discussing adjusted this, that or the other? They even include amortization expense as an adjusted item even though its a defined component of EBITDA. Of course having to talk EBITDA instead of earnings, adjusted or not, is not usually the sign of a strong company either. Their gross margins just three years ago were a full five percent higher but I guess that is old news as its never mentioned.

No analyst ever questions their balance sheet. With negative tangible equity and no recognized impairment on the 20B+ of Guidant related intangibles, it is a continued concern that they might wind up with a multi billion after tax impairment charge at any time. The 2nd Quarter is their stated testing period, so we might see something then. As time goes by (two full years) it becomes more difficult to argue that a permanent impairment has not taken place. Abbott, their acquisition partner who walked away with the Xience stent on which BSX has to now pay license fees related to their new Liberte stent, has ended up with 50% write downs since they received BSX stock with the required mark to market treatment.

It would be nice if they took the time to address these concerns.

Breaking Up is Hard to Do For Boston Scientific and Co-Founder Peter Nicolas

With a title such as "10Q Dectective" I'd hoped for more explanation as to your leverage comment. No dispute with your other conclusions.

You refer to a highly leveraged balance sheet. Under traditional calculations BSX leverage is 2.10 which is low. If you are implying that it should be caclulated after giving effect to net impairment charge of 7B, then it stands around 3.0. Now if the net impairment is 12B then we see leverage around 6.3. Where do you think it is?

It would seem that if this is the second worst deal ever that maybe some write down would be appropriate. I'm surprised than no impairment charge has been recognized to date. Do you think there will be? If so, why not before, how much and when?

FYI: prior to the acquisition, each dollar of long term assets (LTA) produced 1.13 in sales. Subsequently, each dollar of LTA's produces around 30 to 34 cents in sales. Hard to see the bang for the buck.

Earnings Preview: Boston Scientific

Wasted post. Earnings are out, not real earnings, only adjusted earnings. No Guidant impairment, too bad as I think they lost a good opportunity to help get the past behind them.

Earnings Preview: Boston Scientific

Will BSX announce an impairment charge? If they were to do so it might buy them some credibility as they been in denial since the Guidant purchase. 10B pre tax might be a reasonable number but I doubt we'll see anything. With BSX selling at around 1.2 of book it's probably already priced into the stock value but it would help clean up their balance sheet.