While

Bristol-Myers Squibb

(BMY) - Get Report

boosted its flagging stock Thursday with a rosy earnings forecast, plans to sell some assets didn't generate much excitement.

The stock rose $2.31, or 4%, to $58.81. That's still well down from a high of $79 late last year.

To little surprise, Bristol said Thursday it planned to sell its

Clairol

hair care unit and

Zimmer

, an orthopedic medical devices division. Both units have been with the company for decades and, while profitable, neither consistently generated much sought-after pharma-grade earnings margins, in the mid-teens and up. Speculation had been rife that Bristol would announce asset sales or other moves at an analyst meeting today.

"Obviously, Clairol is not a health care company," CEO Charles Heimbold said at the New York meeting, repeating a view some analysts have expressed for years.

But the units' sale -- which analysts say could generate around $10 billion, depending on a number of factors, like taxes -- didn't address the central issue, investors say. The company is facing a revenue crunch in the next year caused by product setbacks, notably involving Vanlev, a potential billion-dollar hypertension drug that was expected to hit the market next year but needs more tests. Adding to the misery, Taxol, a cancer drug that generated $1.5 billion in sales last year, is up against earlier-than-expected generic competition this year, as is BuSpar, an antidepressant.

"I don't know if asset sales are going to necessarily change the story," says Bob Rhodes, fund manager with

Trusco Capital

, a $35 billion Atlanta fund that holds Bristol and other drug stocks. "The concerns have been on the pharmaceutical side, and spinning off the consumer side doesn't change those concerns."

Treading Water
Bristol has had an up-and-down year -- mostly down.

Bristol said proceeds from the asset sales would be plowed back into its core business of drug discovery. Analysts expect the money also will help fund stock buybacks. After the divestitures, expected within 12 months, pharmaceuticals will make up some 85% of sales, up from about two-thirds of Bristol's $20.1 billion in 1999 sales.

'Positivity'

Bristol, of course, can be forgiven for entertaining a focus on core competency, because Wall Street typically rewards pure-play pharmaceutical companies with higher ratings than diversified health care companies. But that wasn't the main reason behind the stock's rise today.

CEO Heimbold said the company intends to meet or exceed Wall Street earnings expectations of 11% earnings growth for 2001 and show even stronger growth in 2002. Further down the road, he continued, the goal is mid- to upper-teen growth after 2002, as well as doubling sales of pharmaceuticals in five years. That would put it on a par with industry leaders like

Pfizer

(PFE) - Get Report

TST Recommends

and

Schering-Plough

(SGP)

.

Nothing wrong with ambition, but can the company do it? Some investors are hopeful.

"This adds another measure of positivity that may not have been there before," says David Saks, chief investment manager for

SG Medscience Fund

, a New York drug and biotech fund. "They delivered on the expectations

for the meeting and maybe a little more. The company has a very depressed valuation relative to their peers." Saks wouldn't say whether his fund holds the stock.

Bristol's plan resembles the hard-charging strategies of other drug companies. Measures include advertising to fan consumer demand for key products like cholesterol-lowering Pravachol and the Glucophage diabetes drug family, along with cutting the time of drug development and whipping up enthusiasm in the sales force (or just whipping them).

That means consumers will be increasingly bombarded with advertising touting newer products such as Vaniqa, a topical cream for the unwanted facial hair that the company says afflicts 41 million U.S. women (who knew?). And the company said it aims to make a new push toward keeping patients, rather than simply winning their first prescription.

Morse Code

Perhaps less standard for drug companies is a push into Japan, the world's second-biggest drug market, where a thicket of regulations and customs has hindered all but the most determined. The best way into Japan is through joint ventures and acquisitions, and Bristol said it's well advanced in talks for such a move.

Of course, if these measures fail to generate stronger earnings growth, there is always the merger option, an oft-traveled route that Bristol took in 1989 with its takeover of Squibb. The industry has been rocked by a series of mergers since then, all aimed at cutting costs, boosting sales and getting a bigger pot of money to pay for crucial research and development.

Bristol's Heimbold said the company is interested in small and medium acquisitions, but downplayed the likelihood of big mergers, like that of rivals Pfizer and Warner-Lambert and the pending marriage of

Glaxo Wellcome

(GLX)

and

SmithKline Beecham

(SBH) - Get Report

.

"Clearly, obviously, our plans outlined this morning don't count on a major merger," said Heimbold.

Still, how clear and obvious that will be after Heimbold retires next year is anyone's guess.