Pharmaceutial company Bristol-Myers Squibb has reported a quarterly loss due to special charges, including a $275m write-down from securities that included sub-prime mortgages.
The drugmaker is among the first companies outside the financial sector to disclose its exposure to the world-wide credit crisis. The charge related mainly to mortgages and credit-card debt pooled and sold to investors.
The unexpected charge took the market by surprise, especially because the investments had high credit ratings. Bristol joins a handful of other companies, including ADC Telecommunications and 3M Co, that in the past few months have been hit by losses from so-called auction rate securities.
Bristol-Myers said the market value of its securities fell by $392m to $419mas of the end of the fourth quarter on December 31. The $275m charge does not have a material impact on the company's liquidity or financial flexibility, or hinder its ability to fund its dividend, Bristol-Myers said.
The company also recorded an unrealised pretax loss of $142m, reflecting adjustments to its holdings that have experienced a 'temporary' decline in value.
Bristol-Myers Squibb said most of its cash and marketable securities have been moved into safer investments such as Treasury bills in view of the current economic climate.
The company said it took the write-down after three well-known brokerages failed to stand by Bristol-Myers when the investments began to sour. The company declined to identify the brokerages but said eight others continued to 'make a market; in the securities, thereby sparing the drugmaker further losses.
The company is assuming it will take another full year for the economy to shake off the 'contagion' from investments that include subprime mortgages whose values have continued to collapse.
For the quarter, Bristol-Myers reported a net loss of $89m, or 5 cents per share, compared with a loss of $134m, or 7 cents per share, a year earlier, when the company took several one-time charges.
Bristol-Myers earned 35 cents per share, excluding special items but including a 2 cent per share contribution from a discontinued business. That compares with analysts' average estimate of 34 cents.
Quarterly sales jumped 33% to $5.38 billion, exceeding Wall Street expectations of $5.25 billion. The rise was largely due to a 177% jump in revenue for its Plavix drug, which was facing tough competition in the year-ago quarter from a generic that is no longer on the market.
