| Aetna (AET) 30.90 -0.14: AET may be the largest U.S. health insurer, but the company itself just got a lot smaller... Earlier this morning management announced that it was slashing nearly 6,000 jobs, or about one-sixth of its work force... Company struggling to right-size its business to reflect declining membership... Should note that lower membership is a strategic decision, as company - like rest of industry - shifts focus from gaining share to returning to profitability... Unfortunately for AET, the company has lagged well behind the rest of the industry on this score... Whereas most of its competitors are enjoying solid EPS growth, driven by rising premiums, AET noted that rising medical costs offset its rate hikes... Briefing.com a little skeptical given that higher medical costs were felt throughout the industry, yet companies such as UnitedHealth (UNH), Oxford Health (OHP) and WellPoint (WLP) are managing to post much better results... Interestingly it was almost one year ago to the day (12/18/00) that AET announced actions intended to improve its profitability and competitiveness... Those actions included cutting about 5,000 jobs... How has management done in achieving its goal? Through the first three quarters of FY01, company has lost $1.37 per share... Going into today's session, street was looking for a Q4 loss of $0.37, and a FY01 loss of $1.74... The outlook for FY02 -- a loss of $0.24... Maybe the best way to return AET to profitability is to cut one or two more jobs... Only this time start at the top and work down. -- Robert Walberg, Briefing.com |
