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Biotech / Medical : HBOC...Buy in here? -- Ignore unavailable to you. Want to Upgrade?

To: John Carragher who wrote (284)	10/20/1998 8:10:00 AM
From: Emec	Respond to of 341

There are 5 downgrades on HBOC this morning. They are having a tough time selling this deal to shareholders. There is a good article on Bloomberg this morning reporting that Columbia HCA Healthcare Corp., the No. 1 U.S. hospital operator said McKesson's plan to buy HBOC could one day help hospitals in their ongoing efforts to cut costs. "I can't see this as anything but being very positive" said Colombia Vice President James Fitzgerald. Fitzgerald said in an interview that he hopes McKesson will use HBO's expertise to develop products that could help his company cut costs by developing technology to coordinate functions like monitoring drug inventories, patient-information databases and accounting systems. "Having top notch information systems is absolutely critical" said Fitzgerald...Information systems are the key to operational success in both the supply chain and accounts receivable". While Nashville Tenn. based Colombia doesn't currently do business with HBO, the software company has been negotiating to sell hospital chain accounts-receivable software related to billing compliance, Fitzgerald said. "If we achieve good results with the relationship we now have with McKesson, over time it becomes much easier and the potential becomes much greater to expand the relationship", Fitzgerald said.

To: John Carragher who wrote (284)	10/20/1998 12:39:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 341

Good morning, John Yes, the point about synergies is well taken. In chemistry and biochemistry the term synergy is used to mean that effects are more than additive. If reagent A causes a reaction at a certain rate, and you add synergist s, which does not cause the reaction to occur, the addition of synergist s to reagent A makes proceed much faster. Generally applied to business, it has taken on "the total exceeds the sum of the parts" kind of argument. Not strictly synergy, but close enough. It generally takes the form of cross selling through existing channels without increasing sales expenditures which is translated into a higher top-line figure without increases in selling costs. But now we are seeing a redefinition. If you eliminate redundant functions these folks are now claiming "synergy". I think its time to jettison all of these buzz-words and focus on financial realities underlying the claims. How does a combination of McKesson and HBOC increase HBOC's sales. How does it increase McKesson's sales? My suspicion is this. I think that while McKesson is nominally the buyer, I think the reality is that HBOC is the buyer. The fact that McCall becomes chairman of the board ought to tell us something. I believe that he will continue to run the HBOC division (which is larger than the McKesson division), and I think it is naive to believe that MCK management will be calling the shots. TTFN, CTC PS I am seriously considering getting out, because it ought to have been clear to McCall that s/h were less than thrilled at the previous attempt to merge with MCK. I think this speaks to a disregard to s/h interests and a certain arrogance.