Art, Wow, a lot of hard questions. I'll answer the ones where I have already given them some thought and try to do some work on the others.
1. I loved the productivity piece. It said what I have been saying forever. We are spending huge sums on IT and in the big picture, it is not delivering the goods relative to the costs. I think it will some day, but the boon to productivity that tech nerds rave about simply does not only not exist, it has had the opposite effect. But, let there be one quarter of above average numbers on productivity and all the talking heads tell you about the wonders of technology without looking behind the single quarter anomaly. Easy fact, our productivity is growing at the slowest rate in the PostWar period. While our valuation of these unproductive enterprises has ballooned. As Joe Jackson would sing, "Something's Gone wrong around here."
2. As you know, HWP is already one of the largest players in analystical instuments. Unbeknownst to many, that area of technology has continued to grow. Its success has been masked by the total collapse of one of my old favorites, Thermo Instruments. But Perkin-Elmer, Waters, and HWP have continued to do well in these areas. No matter what the economy is like, the last thing to go is the testing of the water supply to see if you are killing the population. -g-
I could see HWP making an acquisition in this area. A Waters would fit perfectly, but it is pretty pricey. Thermo Instruments would be a bargain and HWP has the efficient management and solid balance sheet that THI lacks. However, there is a lot of baggage that comes with any Thermo company, so that might be a barrier. I could even see HWP make a run at Boston Scientific if that former flyer continues its nosedive.
3. I think Genzyme will spin off everything they can. It is a smart way to fund research without wacking current eps. So, every time a product group looks to have a lot of potential drugs in the pipeline, expect an offering. In all honesty, I love the spin offs, but I don't know if GENZ eps in any way reflect reality with so much of its research costs off budget. But, I don't play Genz the parent, so that doesn't concern me. And I like little biotechs with a sugar daddy behind them.
4. I think Incyte is simply moving into another phase of its business plan. Perkin Elmer will certainly attack the low end of their business, which is why the stock is down, and they may be willing to cosy up a bit in that area. But I expect the high end and the major thrust to be business as usual.
5. I like HGSI, but I think Incyte represents better value here.
MB |
