Layoffs a Bitter Pill for Employees and Investors
As I write this Pfizershares are down about 2.5% in intra-day trading on top of the 1% loss yesterday. Usually investors cheer when a company announces substantial cost cuts--10,000 jobs, as many as eight facility closures or sales, $1.5 billion-$2 billion in savings by the end of '08. Yesterday you could argue the move was simple selling on the news as the layoffs and cost cuts had been leaked a week ahead of the meeting. But today the stock appears to be off due to a downgrade by Bear Stearns to "Peer Perform" from "Outperform". Analyst John Boris says sales volume for Lipitor (Pfizer's top-selling and the world's most popular drug) is "decelerating" and that the company has to do a major merger or acquisition to quickly goose topline growth. Bear Stearns did work for Pfizer on the recent sale of the consumer unit to Johnson & Johnson .
Speaking of J & J, the company reported this morning that sales of its drug-coated stent "Cypher" fell 15% in the fourth quarter amid concerns about drug-coated stents causing blood clots. Bank of America medical device analyst Glenn Novarro says the $280 million U.S. Cypher sales number was more than $70 million below his estimate. Based on that report shares of Boston Scientificare down as well today. That company which makes the only other drug-coated stent on the U.S. market is scheduled to release earnings on February 1st.
And a couple more notes on Pfizer. While it did not allow cameras into the news conference with executives following its analyst meeting yesterday, it did decide to put Chairman and CEO Jeff Kindler's opening remarks at the meeting on a satellite so we could use actual video and sound from inside the meeting on TV. Progress! And shortly before the news of the massive layoffs hit at 12:30 ET yesterday, at least four New York City cops suddenly appeared outside the midtown Manhattan office building (Pfizer and other companies rent the auditorium there for analyst meetings) where the analyst meeting was to take place. Pfizer's headquarters is just a few blocks south of the location, the Brooklyn facility it announced it was closing is a quick subway-ride away, but I also wonder if this was more Michael Moore-effect--if there was a concern he or one of his crews might try to crash the event. He's reportedly working on a documentary about healthcare called, "Sicko" and layoffs at the world's biggest drug company would be right up his alley--think back to "Roger & Me".
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