Weekend Edition: Merck Calls The Ambulance Squad

Things have gotten so bad at Merck that they are renting ambulances for victims of the company’s Vioxx drug and MRK sharesholders.Merck disclosed yesterday that it was in a dispute over $5.58 billion in taxes it may owe the US and Canada.Almost any child who reads a newspaper knows that Merck’s Vioxx painkiller may cause heart problems and that the company is involved in countless suits that could cost it billions of dollars in damages. And now the taxman cometh.Merck has $6.2 billion in cash on its balance sheet, so, if it had to pay these taxes, it would not have a great deal left to cover Vioxx judgments, although future earnings could generate more cash.It is hard to figure out how the tax number could get so high. Merck’s revenues are about $22 billion, so it is a pretty big bill.Merck’s shares have recovered from the Vioxx shock. Its stock has recovered from a 52-week low of $27.99 to $45.90, near its high for the period. In 2003, the stock traded at $63.The tax issue is bound to send the shares lower.It is hard, almost impossible to believe that Merck was Fortune’s Most Admired Company for six years in a row.How the mighty have fallen.

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