Boston Scientific (NYSE: BSX) is a company in trouble. It spent too much for medical device company Guidant, leaving it with $8.3 billion in debt. And sales of its drug-coated stents have been hurt by clotting problems. The company lost $272 million in the last quarter.

The combination of high debt and poor earnings has done a great deal of damage to the stock. The company's shares are down about 22% this year.

Boston Scientific has come up with a simple plan, which is to sell itself off in pieces until its debt comes down to a level that it can service. Today, the company sold its cardiac surgery and vascular surgery units for $750 million. The buyer was Getinge, a Swedish company. The two units were part of Guidant.

The announcement is another example of the hideous cycle that begins when companies overreach. From late 2003 to early 2005, before BSX bought Guidant and took on mountains of debt, its shares moved from $13 to $35. Earnings were strong and shareholders were happy. But BSX management could not resist buying another medical device company and got into a brutal bidding war with Johnson & Johnson (NYSE: JNJ), which pushed the price of Guidant to an irrational level.

Now, Boston Scientific can sell off what it bought, but probably at a lower price.

Douglas A. McIntyre is an editor at 247wallst.com.

Boston Scientific unit sale digs it out of hole originally appeared on BloggingStocks on Mon, 05 Nov 2007 06:10:00 EST. Please see our terms for use of feeds.

Put back the crash carts. Boston Scientific (NYSE:BSX) is up and walking. A sharp, short-term decline in use of drug coated stents, brought on by studies that show they may cause heart problems, has not significantly hurts sales overall. The FDA, after a survey of its own, has not restricted use of the devices.

According to analysts at several Wall Street firms, drug coated stents will keep a 75% to 80% share of the market. At Boston Scientific, sales of the stents represent 25% of sales. If the market in the product stabilizes, it could be the event that helps repair the company's image which has been damaged by worries about stent sales and problems with products from its Guidant unit.

Boston Scientific's stock has been pounded like a red-headed mule as concerns about stents and problems with Guidant have mounted. The stock traded for $36 two years ago and now changes hands at a little over $16. While the S&P is up close to 20% over the 24 months, BSX stock is off by slightly over 50%.

With stents back in fashion, it is now or, perhaps, never for a BSX recovery.

Douglas A. McIntyre is a partner at 24/7 Wall St.

A reprieve for Boston Scientific originally appeared on BloggingStocks on Thu, 28 Dec 2006 12:49:00 EST. Please see our terms for use of feeds.