It's gotta be hard on the ego: The company you spent 10 years leading announces that you're stepping down -- and shares rise 5%. Granted, the S&P 500 bounced back a little yesterday, too, but it rose by less than half of what Boston Scientific
The company announced that President and Chief Executive Officer Jim Tobin would resign next month, replaced by Ray Elliott, former CEO of fellow medical-device maker Zimmer Holdings
While I can't blame investors for being a little excited about Tobin's departure -- the stock has fallen more than 50% over the last 10 years -- not all of Boston Scientific's issues are his fault. He did lead the company on a spectacular run into 2004, when the stock enjoyed four times its present value, but worries about the safety of drug-eluting stents played a major role in shares' decline. Boston Scientific overpaying for Guidant, after it outbid Johnson & Johnson
Perhaps investors are less excited by Tobin's departure than by Elliott's arrival. The CEO-to-be said, "[Y]ou know that I am fanatical about sales and cash flow." That should be music to Fools' ears; cash flow, not earnings, is the driving force for a company's growth.
Elliot is also looking to diversify Boston Scientific even further. The company sells a wide array of products, but about half the sales come from stents and heart devices. Being more well-rounded -- like, say, Medtronic
Our cash flow lovefest continues: