Apparently to comply with SEC Reg FD, after some remarks by Ken Frazier at the Sanford Bernstein investor conference yesterday, Whitehouse Station put out an "Investor FAQ" this morning. My reactions?
First, this must mean that New Merck has greatly increased the amount of currency hedging it is undertaking (compared to the relative dearth of such hedging by legacy SGP) -- as I mentioned last month. This is a fairly substantial current-quarter cash cost, but may partially offset potentially-larger future European sales line declines.
Second -- as ever -- the 2010 guidance "excludes certain items". That's a green-light license to revise EPS guidance, under the guise of bust-up transaction-related costs.
Moreover, should the dollar strengthen appreciably from here (vs. the euro), Merck's reaffirmance would no longer be operative.
Finally, New Merck is buying back its own stock -- in a sign that it feels the stock has been under pressure. So Whitehouse Station has come out to defend it.
My parting observation? They'll chew through the $3 billion of buy-back authority pretty quickly, if we see a bunch of 15 million share days, with order imbalances.
In any event, here it is (linked as a PDF file):
. . . .Does the 2010 guidance still hold with all the global economic changes?
As of June 2, 2010, the company reconfirms its full year 2010 guidance non-GAAP EPS range of $3.27 to $3.41, excluding certain items and 2010 GAAP EPS range of $1.15 to $1.50. The company also reconfirms its long-term target high single digit non-GAAP EPS compound annual growth rate from 2009 to 2013.
Are you actively buying shares in the market as part of your $3 billion repurchase program?
Yes, we recently initiated repurchasing shares under our $3 billion share repurchase program which was authorized by the Board of directors in November 2009. . . .
Stay tuned.
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