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This column is from Adam Feuerstein, whose commentary usually runs only on RealMoney. We're offering it today as a special bonus to readers. To read Adam's commentary every day, click here for information on a free trial to RealMoney.

Well, this time at least, Fred Hassan showed up in person to deliver the bad news.

The new CEO of



who was selected to turn around the flailing drugmaker, was present for a dismal third-quarter earnings report Wednesday, and he even took questions from analysts on a conference call. That was more than he did in August, when he angered Wall Street with his conspicuous absence from a conference call after Schering-Plough cut its dividend and drastically lowered current-year and 2004 earnings estimates.

Hassan has warned repeatedly that Schering-Plough's situation will get uglier before it gets better, and that message was certainly hammered home in the third-quarter report: The company swung to a net loss in the third quarter, amid a drop in sales.

The company reported a net loss of $265 million, or 18 cents a share, compared with net income of $429 million, or 29 cents per diluted share, in the year-ago period.

The company said the loss reflects the addition of $350 million to the company's litigation reserves relating to investigations by the U.S. attorney's offices for the District of Massachusetts and the Eastern District of Pennsylvania into the company's marketing, sales and clinical trial practices.

Analysts were looking for earnings of 10 cents per share on $2.1 billion in revenue, according to Thomson First Call, though this consensus view didn't take into account the $350 million charge.

Sales in the quarter were down 16% from the year-ago period, to $2.0 billion. The company's allergy drug franchise, namely Claritin and Clarinex, has been hit hard by generic and over-the-counter competition. Meanwhile, the Intron drug franchise, once a mainstay of the hepatitis C market, has come under extremely heavy pressure from Roche, which recently launched a competing product that is rapidly stealing market share.

"We have inherited significant problems and disconnects in our business. We think we will be successful, but the problems are a long time in the making, and there are no quick fixes," said Hassan on the conference call.

In August, Schering-Plough cut its divided by two-thirds, to 5.5 cents per share from 17 cents per share. The company also warned that its second-half 2003 earnings would be lower than the 22 cents per share in the first half, and that 2004 earning would be lower than those in 2003.

Schering-Plough's shares were off 5.8%, or 92 cents, at $15.08 in afternoon trading Wednesday.