Tenet ( THC) investors, anxious over the outcome of a high-profile criminal trial, continue their agonizing stay in the waiting room.

Despite recent complaints from a juror that sparked the prospect of a mistrial, a 3-year-old kickback case involving the hospital chain continues to drag on. A San Diego jury now faces its 39th day of deliberations in an extraordinarily long 10-month trial that follows an earlier mistrial last year.

Prudential analyst David Shove had clearly hoped for better when hearing about some possible jury turmoil last week.

"We have always believed that the longer this jury deliberates, the greater the chance of no verdict," wrote Shove, who has a neutral-weight rating and a $9 price target on Tenet's stock. "We also believe that if this trial ends in a hung jury, there will not be a third trial. All of this would be especially positive for Tenet, as they would be able to start recruiting doctors more aggressively and volumes at the company may improve. Maybe -- just maybe -- it is getting closer to this outcome."

For now, however, a federal judge has paved the way for deliberations to continue by denying Tenet's latest efforts to have the case dismissed. In addition, the San Diego Union-Tribune reported on Wednesday, the judge has decided against unsealing some documents -- including a sensitive juror note -- that could have shed some light on the jury's debate over whether the defendants engaged in illegal behavior.

A Tenet subsidiary, the company's Alvarado Hospital Medical Center in San Diego and former Alvarado CEO Barry Weinbaum, stand accused of giving doctors illegal kickbacks in exchange for patient referrals. The defendants have claimed that they offered the doctors legitimate "relocation packages" to address physician shortages instead.

The case has reportedly dampened enthusiasm for relocation packages throughout the hospital industry. But it has taken an especially heavy toll on Tenet, which has seen its relationships with physicians strained -- and its patient volumes hurt -- in the wake of intense government scrutiny.

Tenet fell 8 cents to $7.19 on Thursday and remains within 50 cents of its recent 12-year low.

Another Act

The Tenet Shareholder Committee, a group long critical of company management, recently compared the Alvarado case to Samuel Beckett's classic "Waiting for Godot."

But the committee, unlike some analysts, believes that the lengthy deliberations signal thorough reviews that will result in guilty verdicts on at least some of the charges. Moreover, the committee believes that even an outright acquittal will fail to cure Tenet's problems in the end.

"Mired in troubles, Tenet supposedly is going to use a favorable outcome in the Alvarado case as a springboard to a federal global settlement of its manifold problems -- at least that's the view of Tenet-friendly analysts," the committee wrote on its Web site last week. But "no matter which way the case goes, we doubt that Tenet will get much traction from it. The company faces too many problems elsewhere."

'Tenet Standards'

Tenet's dismal fourth-quarter results, issued last week, clearly revealed ongoing operational challenges at the company.

Merrill Lynch bond analyst Michael Scarangella recently deemed those results weak "even by Tenet standards." For starters, the company's pretax profit fell well short of Scarangella's estimates due to falling admissions and rising bad-debt expense. As a result, Scarangella noted, the company's cash flow was negative -- again -- and its leverage climbed in the latest quarter.

Moreover, looking ahead, Scarangella portrays the company's 2006 guidance -- which calls for breakeven results at best -- as a bit of a stretch.

That guidance "is predicated on attaining inpatient and outpatient volume gains," Scarangella points out. "This seems aggressive to us, given that the company finished 2005 (with volume declines) and the industry as a whole is running flat to slightly down" on the inpatient side at least.

Finally, Scarangella warns that Tenet could burn through its huge cash pile before the year ends. Right now, he notes, Tenet is sitting on some $1.18 billion in unrestricted cash. However, he estimates, Tenet will need up to $300 million beyond the cash it generates to fund its operations. In addition, he says, the company must pay $140 million for a class-action settlement and could fork over another $1 billion to reach a global deal with the feds.

Still, Scarangella recommends buying Tenet's high-yield bonds regardless.

"While this (global) settlement is likely to be structured as a multiyear payment, the 2006 installment would likely be a material drain on cash," Scarangella acknowledged last week. But "we do not believe liquidity is an issue even in the event all the cash is spent in 2006, given our view that any number of banks would agree to lend to Tenet."

Merrill Lynch itself has lent Tenet a hand in the past. The firm has provided investment banking services to Tenet over the past 12 months and expects to do so again in the three months ahead. In the meantime, it has a "significant financial interest" in the company's fixed-income securities.