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Strategies & Market Trends : Joe Stocks Trader Talk
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To: Joe Stocks who wrote (608)3/21/2002 9:50:57 PM
From: Dan Duchardt  Read Replies (1) of 787
 
Joe,

On the down side:

Approximately $2.6 Billion of Rated Debt Affected
(Press release provided by Moody's Investors Service)
NEW YORK, March 19 - Moody's Investors Service lowered the
debt ratings of Elan Corporation plc <ELN.I> <ELN.N> (senior
guaranteed debt to Ba2 from Baa3). The downgrades reflect weak
operating cash flow from core product sales together with
Moody's expectation that the cash flow generation of Elan's
core pharmaceutical product sales will remain modest relative
to the company's high debt levels.
Although the company currently holds significant levels of
cash and other investments, the values of certain balance sheet
investments will likely be volatile because they are comprised
of smaller pharmaceutical/biotechnology holdings. Also, Moody's
is concerned that Elan may elect to use some of its balance
sheet cash to step-up product acquisitions in order to boost
future cash flows. The ratings remain under review for possible
further downgrade because of uncertainties associated with the
current SEC investigation into Elan's accounting practices.

I had the good fortune to have sold ELN before it tanked. Not because of any insight, but simply because I wanted to cash out an account before moving it. It was a long term position I acquired when ELN took over Liposome (LIPO). I about broke even, but that looks pretty good now.

Hopefully the prices now reflect all the bad news and the FDA approval will start moving it back up. I took a small long position today.

Dan
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