Considering the debacle with the flu vaccine, Chiron's (NASDAQ:CHIR) earnings release announcing that it beat analyst expectations is more than somewhat superfluous. It doesn't really matter that you earned a profit of $24 million for the quarter when you've written down $91 million to the cost of sales because you had to destroy 48 million doses of your flu vaccine and thrown the nation into a panic.

On a pro forma basis, the company earned $0.26 a share, but that number includes a $78 million lump-sum payment from Hoffman-LaRoche for a patent lawsuit settlement and $32 million in deferred royalty and license fee payments. Those earnings were off 56% from last year's $0.60 results but were ahead of analyst expectations of $0.06 per share.

While some analysts think that Chiron now represents a value play, considering that its stock has taken a hit of more than 30% since problems with the vaccine supply first surfaced, investors may still be in for further spankings.

As expected, trial lawyers are circling like carrion birds, filing class-action lawsuits on shareholders' "behalf." Yet equally important is the damage wrought to Chiron's image and credibility, and it is still uncertain how deep the problems run with the manufacturing facility. It was initially believed only a few million doses of vaccine were contaminated before U.K. authorities shut down the plant, saying the entire inventory was hopelessly tainted. Nor is it certain whether the company will be back on line for the 2005 flu season, though hopes are that manufacturing can begin again early in the year. The full cost of the remediation plan remains a big unknown right now.

Other companies are taking the opportunity to profit from Chiron's mess. MedImmune (NASDAQ:MEDI) announced that it will make available to the U.S. market an additional million doses of its FluMist nasal vaccine. Coupled with Aventis (NYSE:AVE) providing some 58 million vaccine doses, authorities say the country should have enough to meet the need, even if it's a severe flu season. Still, before Chiron's problems arose, it had been hoped that 100 million doses would be on hand.

The U.S. is also involved in negotiations with other companies in Canada, France, and elsewhere in Europe in hopes of obtaining surplus supplies. Also, new technologies may soon appear as well. A number of companies are developing methods of creating a vaccine from cells rather than chicken eggs. Crucell (NASDAQ:CRXL), Baxter International (NYSE:BAX), and ID Biomedical (NASDAQ:IDBE) are being spurred by the growing demand.

What this means is that Chiron's future is not certain. Assuredly, if management confronts this crisis in an up-front, timely fashion and is able to not only regain the wherewithal to begin production again but also convince distributors and investors that it was only a momentary problem not completely of its own making, then Chiron may once again regain its former luster.

The Motley Fool's new Inside Value newsletter seeks companies that have been beaten down or are on the outs with investors for a number of reasons. In its inaugural issue, it chose MCI (NASDAQ:MCIP) as a classic turnaround: Following MCI's own disastrous relationship with number-crunching impaired WorldCom, it now has management with integrity in place and is still able to turn out lots of cash. Does Chiron fit that bill?

Management does indeed appear to be confronting it head-on. It acknowledges it is in for some tough times. And even after writing off the $91 million, it's still able to be comfortably profitable, admittedly with some help from settlements and deferred payments. The real test will be to see whether Chiron loses out to other manufacturers that step up to the plate to fill the company's void. For the immediate future, at any rate, my crystal ball is too cloudy to tell.

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Fool contributor Rich Duprey apparently used a cloudy crystal ball to predict the Yankees winning the World Series this year. He does not own any of the stocks mentioned in this article.