What do these words have in common: "plummets," "unnecessary," "shocking," "staggering," "immense," "critical," "foundation," and "crucial"? According to the House Government Reform Committee, apparently, them's all fightin' words.
Embattled pharmaceutical giant (and Motley Fool Income Investor recommendation) Merck (NYSE:MRK) begs to differ. It considers them merely "Driving Discussion Words" and includes them in a fairly typical "active listening"-themed, in-house class for Merck salespeople called "Captivating the Customer."
The training manual for this class is included among the 20,000 pages subpoenaed by the committee, along with the manual for a course called "Professional Presence," which asks the philosophical question, "What does 'good' look like?" and asserts, enigmatically, that "Good manners are based on kindness and respect, which transcend etiquette."
But the committee wasn't really interested, it seems, in what the Merck salespeople said, but what they didn't say: that in 2000, trial studies were beginning to show that Vioxx was not the pain panacea the salespeople were touting so enthusiastically. On the contrary, evidence was beginning to indicate that patients using the drug for more than 18 months risked doubling their chance of a heart attack or a stroke. Did the Merck salesfolks know about this study? Did they deliberately mislead the physicians by distracting them from the truth with a "proper handshake," one that "comes with eye contact," "is firm but painless," "lasts about 3 seconds," and "starts and stops crisply" (from the "Professional Presence" manual)?
Oh, come on. Caveat emptor and all that. Even the committee chairman himself, Rep. Tom Davis (R-Virginia), noted that "a wide-awake" doctor would have been aware of worrisome studies that had been popping up in the media for some time. Sure, salespeople should be ethical. Sure, they should be honest. But they also gotta be well-liked. (Thank you, Willy Loman.)
In the meantime, this little body language lambada doesn't seem to be hurting Merck all that much. Of course, how many more headaches can this company stand? It's facing more than 2,300 lawsuits from customers, chief executive Raymond V. Gilmartin resigned, sales increased only 2.2% in the last quarter of 2004 compared with the year before, and earnings per share have plummeted (wait, "plummet" -- that's one of Merck's favorite words!) 21%. Is it Vioxx con dios for this company?
Not if you're a Foolish investor. For the past several months, several Fool analysts have been rallying around Merck's flag. Back in March, Brant David McLaughlin opined, "In my opinion, Fools would be wise not to follow the crowd in taking on what I'd call an excessively negative attitude toward the company in the wake of some dark news." By the end of April, Stephen D. Simpson was reminding us that "the base business at Merck seems strong, and the pipeline should give investors reason to expect that better things could be on the way." And by early May, David Meier was highlighting the opportunity to "purchase a piece of Merck at bargain prices."
The "Captivating the Customer" manual defines "charisma" as "an exceptional ability to secure other people's devotion or loyalty." Whether the committee thinks its salespeople are charismatic or just plain con artists, Merck's actions will eventually speak louder than its words for patient investors.
Merck's hefty dividend yield (currently at 4.63%) attracted Mathew Emmert to the company for Motley Fool Income Investor subscribers. If you'd like to discover other dividend-paying companies, take a free, 30-day trial.
Fool contributor Ellen Dowling, the Standup Trainer, writes Foolish articles in between public speaking gigs. She owns no shares of Merck, but she would be delighted to hear from you via email.
