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Boston Scientific

(NYSE:BSX) released its fourth-quarter 2000 results yesterday, and took the opportunity to blame its slumping share of the stent market on its supplier, Medinol. Boston also stated that the talks to buy Medinol might go nowhere.

Boston blamed its slumping share of the stent market on Medinol's sluggish product development. The Natick, Massachusetts-based company has seen its share of the global $2.6 billion-a-year stent market drop below 20%, compared with 35% in 1999. While Medinol dithered in developing new stent products, Boston alleges, rivals

Johnson & Johnson


Guidant Corporation

(NYSE:GDT) and

Medtronic Physio-Control

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(NYSE:MDT) jumped on the slack.

The American medical-equipment supplier reported earnings of $87 million, or 22 cents per share, for the fourth quarter of 2000, missing consensus forecasts by one cent. Its fourth-quarter sales dropped 12% against the corresponding quarter of 1999 to $638 million. Sales for 2000 slumped by 6.5% compared with 1999 to $2.66 billion. However, Boston CEO Jim Tobin told analysts in a conference call Tuesday night that he is feeling bullish about the company's short-term prospects.

Boston already holds 22% of Medinol's shares. Another 64% is held by Kobi and Judith Richter, and the rest is held by a third party. Faced with the alternatives of developing its own line of stents or acquiring control over Medinol, with which Boston does not have good relations, Boston has been negotiating since August to take over the company.

Despite recent press stories that the parties were on the brink of a deal, yesterday Boston said that the negotiations were difficult, and might lead to nothing. Some sources say Boston and Kobi Richter cannot agree on a price. Early assessments had Boston paying between $1.5 billion to $2 billion for the remaining 78% of Medinol, extraopolating to a company value of $1.9 billion to $2.5 billion. But Credit Suisse First Boston claims that Kobi Richter is demanding a company value of $8 billion for the deal.

Medinol's NIR line of stents are metal mesh tubes used to prop open unblocked arteries after coronary surgery. As a private company its precise sales and profits figures are unknown. But it is thought to have sales of about $350 million a year, and to make an annual profit of $100 million. Boston is its main customer.

Despite its difficulties with Medinol, Boston has evidently not soured on Israeli technology. Last week Boston reported investing in the Herzliya-based company

Super Dimension

, which develops technology to navigate medical equipment inserted into the body through non-intrusive means.

Boston Scientific did not disclose the extent of its investment in the Israeli company, or at which valuation it was made. But sources close to the deal say that Boston Scientific's investment came to $4 million, and was made at a $25 million company valuation.