I love a CEO who tells it straight. Not only is it nice to have transparency, but such people tend to be a little more cocky, which is a nice thing to have in a leader.
GlaxoSmithKline's
And while investors have knocked down Glaxo's stock a lot in the last 18 months, the company isn't hurting nearly as much as everyone else -- especially the little guys. So Glaxo isn't going to use its cash to buy back stock, but instead look for strategic acquisitions.
Sounds good to me.
This isn't anything new. Glaxo has made plenty of acquisitions over the years including a recent acquisition of Bristol-Myers Squibb's
Of course, it doesn't always exercise those options, having turned away from the remainder of Exelixis' pipeline just today. On the other hand, Witty did say that small drug companies have been approaching Glaxo to discuss being acquired.
Glaxo of course needs partnerships like the above to pay off since it's been essentially treading water for a while now. Revenue was up 7% year over year, but that was entirely due to the falling pound. At constant currency, revenue fell 3% from the year-ago quarter.
The problem is that many of the drugs that Glaxo sells in the U.S. are now facing generic competition -- blood pressure drug Coreg, epilepsy treatment Lamictal, and anti-depressant Wellbutrin all saw sales cut in half. Add to that continuing falling sales of Avandia, as diabetics shun the potential heart problems for apparently safer alternatives like Takeda's Actos and Merck's
At this point treading water seems like a good thing. Investors can collect their 5.7% dividend check while they wait for Glaxo's partnerships to develop.