If you're looking for the potential down side for MO, I think the appropriate comparison would be Johns-Manville. On the one hand, the people damaged by Manville's products were easier to identify, and the finding of responsibility for that damage was easier to establish. Those pictures of workers covered in asbestos dust went a long way toward making the plaintiff's case. Also, Manville could only dream about the cash flow that MO generates. On the other hand, the potential number of victims, though more diffuse, is much larger for MO, and that cash flow will make it a never ending target for attorneys around the world.
I own a little of it, and I've been pondering for a while whether to buy more or get rid of what I own. I'm leaning toward selling. No matter how good the management of a company is, there are certain things that are beyond their control, such as nuclear war and court cases. Management (here and in the industry as a whole) has already made a series of misjudgements in handling the liability issues. In hindsight, they should have made a deal years ago when they were still dealing from a position of strength. At the point when the executives knew they were about to be forced to go up and lie to Congress, they should have cut their losses. Also, the other divisions should have been spun off long ago while it was still possible to shelter them from liability.
Of course if you're in a speculative mood, this is a tempting one. The upside is tremendous if the company can avoid using bankruptcy to settle their legal issues. Just be prepared to go to zero if they can't. |
