Friday, July 06, 2007

A Bad Hair Day at Quest Diagnostics

Perhaps one of the important questions being asked in the executive offices of Quest Diagnostics has until recently been “will a labor union manage to convince some individuals that they would be better off with union representation?” But in light of recent talk of a leveraged buyout of Quest Diagnostics that question might well have changed to “am I going to be around long enough to find out?”

That last question might well be asked by those seeking to bring in a labor union. Many questions arise in light of reporting at
Bloomberg Radio and Reuters News Group since they are running with a story that Quest Diagnostics is prime to be taken over.

What this represents in terms of the future of the company is clearly unclear to me and I am certain others as well. I suspect that much of this situation is in some way related to a decision of C.E.O. Surya Mohapatra to walk away from a long term contract with United Healthcare.

The net result of that action has been a significant loss in volume resulting in a number of internal readjustments and brushfires needing to be put out and a severe devaluation of stock price at that time.

But in reality the company seems strong and a good investment. Perhaps the fact that the stock had become so pathetically undervalued has set up this current buyout issue.

The question in my mind is does the company posses the wherewithal to prevent a leveraged buyout. I am certainly no investment maven but I would suspect that it would be a matter of buying enough of their own stock to make such leveraged buyout impossibility.

At least finding someone who is able to purchase enough stock to prevent it and at the same time remain dedicated to the current management, a management whom some blame for making shortsighted contractual decisions.

Then there is always the scenario that current management might simply say the hell with all of you, to hell with ungrateful union rat finks and every employee for whom we bent over backwards in order to protect the security of your job.

I sincerely hope that the latter is not being seriously considered by management since many inside of Quest Diagnostics still hold dear the vision and roadmap of Surya. I sincerely hope that the management of Quest Diagnostics conveys to any considering a union that disloyalty to their company just might factor into decisions being made by management, decisions that shall most certainly place staff in a den of wolves.

In order to conclude this inadequate article with some degree of respectability I will simply quote the words of a friend, an executive at Quest Diagnostics, who having far more insight on such matters might have been making a subtle statement to me while commenting on an issue which is unrelated to finance, without my recognizing it as such at that time.

[All business organizations morph in order to adjust to the market as the market is a great "discipliner".]

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