Best & Worst: Bausch & Lomb flunks crisis management with eye fungus

This post is written as part of AOL Money & Finance's Best & Worst 2006. If you think this was the dumbest moment in business, cast your vote.

Bausch & Lomb's (NYSE:BOL) stock still hasn't recovered from its bungled management of rumored product contamination earlier this year.

I say rumored because the FDA never found conclusive evidence that the company's MoistureLoc solution directly caused serious fungal eye infections. But the company's slow-motion response to a growing chorus of suspicious infections cost it dearly in the end. The product was pulled from the Asian market in February, and the American market on April 13. A worldwide recall was issued May 15.

The company's stance was that there was nothing found in the various FDA inspections. But it was like talking into a gale force wind. The circumstantial evidence piled up. February 15 saw the stock at $70; by May 12 it traded at around $40.

It's hard for management to get in front of a worldwide recall when the company's culpability remains in question. But that's just what Bausch & Lomb needed to do, and didn't. Doing the right thing too slowly can be as damaging as doing nothing at all, particularly when it comes to consumer health products. It's peoples' eyes for goodness sake, get it off the shelves everywhere! The solve-the-mystery-later approach came a little too late.

In November of 2005, Bausch & Lomb had a share price of $82. Today it's at about $49. Yet the best the FDA could come up with in its most recent spanking of the company was to cite it for failure to report foreign infections -- the jury is still out on the actual cause.