How to Muck Up a Turnaround in 12 and a Half Months

By Brian Orelli | More Articles
September 14, 2011 | Comments (1)

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Boston Scientific's (NYSE: BSX ) choice for a new CEO has the potential to really muck up its recovery even further -- if that's even possible.

The old CEO, Ray Elliott, said he was stepping down in May, so the announcement of a new head honcho was expected. And the choice, Michael Mahoney, certainly seems like a good one; he's currently worldwide chairman of the medical device and diagnostics group for Johnson & Johnson (NYSE: JNJ ) , so he has experience in the business.

It's the transition I'm worried about. Apparently as part of his non-compete agreement with Johnson & Johnson, Mahoney can't take the reins until November of next year. In the meantime, Mahoney will serve as president when he joins Boston Scientific in the middle of next month. Hank Kucheman -- currently the executive vice president, and group president of the cardiology, rhythm, and vascular group at Boston Scientific -- will take over as interim CEO.

So for 12 and a half months, Kucheman will be Mahoney's boss with Mahoney knowing full well that he'll eventually have the position. And when Mahoney does take over, Kucheman isn't planning on retiring, so Mahoney will then become Kucheman's boss. Can you say, "Awkward"?

Who knows, maybe this is all just a show to make Johnson & Johnson happy? Maybe Mahoney will be making all the big decisions, and Kucheman is just a puppet? If not, things could get really ugly in the event the two don't agree on a long-term strategy for the company.

Boston Scientific is well off the bottom it reached last year, but I still wouldn't touch it until it's clear there is a turnaround. Take a look at Medtronic (NYSE: MDT ) , St. Jude Medical (NYSE: STJ ) , Abbott Labs (NYSE: ABT ) , or one of the other medical device companies instead. They might be able to use any leadership weakness at Boston Scientific to their advantage.

What do you think? Am I worried for nothing? Take our Foolish poll and fill in your thoughts in the comments box below.

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Sounds good. Two heads are better than one.
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Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Johnson & Johnson, St. Jude Medical, Medtronic, and Abbott Laboratories. Motley Fool newsletter services have recommended buying shares of Abbott Laboratories and Johnson & Johnson, and creating a diagonal call position in Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.

Report this Comment On September 14, 2011, at 3:45 PM, clmazzola wrote:

I agree that on paper it has the potential to awkward.
However, if you knew Hank Kucheman, your concerns would be greatly lessened. Hank and I worked together in two different companies, each of which was challenging in its own way. If anyone can make this situation work, it's Hank.

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