Things just still aren't going all that well at Bristol-Myers Squibb
Financial performance in the quarter wasn't great, but it did go a bit better than most analysts had expected. Revenue was flat, and margins were down at both the gross and operating level. And though both operating income and income from continuing operations dropped, the company nevertheless did exceed the median estimate by almost 10%.
The real question, though, is whether those earnings are about to come under severe duress. Last week, the company revealed that the Department of Justice had decided to open a criminal antitrust probe of the deal that Bristol-Myers and Sanofi-Aventis
Now, the word "criminal" may sound scary, but the notion that Bristol-Myers execs will get led away in handcuffs is pretty far-fetched in my book -- and even more so for Sanofi's French managers. Nevertheless, potential financial penalties, not to mention blocking the deal, would not be a good thing -- nor would the loss of Plavix to generic competition.
Of course, that's not all Bristol-Myers has to worry about. A new drug that Amgen
Bristol-Myers has been bandied about as a potential takeout candidate at various points, and it's probably true that the company's early-stage pipeline is undervalued and likely cheaper to buy than to duplicate. Still, it's impossible to ignore the sizable overhang and uncertainty that this Plavix settlement/investigation has created. I wasn't crazy about Bristol-Myers when the settlement still seemed all right, so I can't say I'm wildly enthusiastic about the stock right now.
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Fool contributor Stephen Simpson owns shares of Sanofi-Aventis, but has no financial interest in any other stocks mentioned (that means he's neither long nor short the shares). The Fool has a disclosure policy.