2/16/2010
By Charles Payne

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I remember always telling the story of the success of the guys that started this little medical device company that became a giant. It was the quintessential American success story. At one point, the founders found themselves on the vaunted Forbes 400 list of richest Americans.

Like any legend there are different versions of its genesis. There are two stories on how John Abele the scientist and Pete Nicholas the businessman met, one says their children were playing together and another says they met at a small neighborhood dinner party. That was 1978.

So far so good as the company invents a niche in the medical industry and the rewards are rich, but management continues to want to grow through acquisitions.

The day that the deal was made Fortune magazine called it the second worst ever! BSX was changing hands around $23.00 a share when the deal was completed, and has never been higher. It's hard to imagine it all fell apart the way it has. The company has just settled a longstanding lawsuit with JNJ for $1.7 billion, announced it lost $1.1 billion, and will release 1,300 employees or 10% of its workforce. Some smart people in the industry think the company is doomed. What a shame.

From Horatio Alger to cautionary tales I guess I will tell the story over and over again in the future, but what a story it could have been.

We need deals like this, and we also need more industry consolidation. It's picking up but nowhere near a level that suggests that the economy is on the verge of turning. That should change as the year progresses.

Charles Payne
Wall Street Strategies