Bausch & Lomb Decides To Focus Efforts On Eye Care

For years, investors may have wondered what business Bausch & Lomb hoped to make its focus: sports optics, dental care or its popular brand of contact lenses and solutions.

Now there can be little doubt.

On top of a $100 million restructuring the giant optical products maker announced in April, it is rapidly selling off several noncore divisions and replacing them with companies that complement its eye-care businesses.

William Carpenter, Bausch & Lomb’s chief executive, is betting that the company’s retooling will remedy five years of flat sales and halt a serious revenue erosion in its eyewear division. Eager to create some interest on Wall Street, Carpenter and his management team are wasting little time in realigning the company.

Earlier this month, Bausch & Lomb, which is based in Rochester, N.Y., sold its Thin Film Technology coating business to Applied Image Inc. for an undisclosed sum. In 1995, the company sold its sports optics business, and last year, it sold its oral care and dental implant divisions.

Holding to its mission to concentrate on the eye, the company said in October that it would pay $380 million for Storz Instrument Co., a maker of ophthalmic instruments and drugs, and pay $300 million for Chiron Vision Corp. The acquisitions are expected to push Bausch & Lomb’s eye-care sales to more than $2 billion, 5 percent more than in 1996.

On the day the company announced its retooling in April, including the elimination of 1,900 jobs, its stock rose $1, to $40.125. When Bausch & Lomb announced the acquisition of Storz, the stock rose $1.1875, to $42.1875, but it lost the entire gain only a day later. The stock has traded recently around $37.50 a share.

The trouble is, while Wall Street analysts say Bausch & Lomb is on the right track by narrowing its focus, neither they nor investors are likely to show much enthusiasm until the earnings improve. Earnings through the first nine months of this year have drooped 37.5 percent, to $42 million, largely because of restructuring charges, but rose 28 percent in the third quarter.

“We should be trading at around $50 a share,” Carpenter said, after a recent meeting with analysts in the Plaza Hotel in Manhattan. “But the company is in turnaround now, and Wall Street may want to see what happens with our sunglass businesses. In the early ‘90s, we milked the sunglass business but didn’t invest much into it. That’s all been changed.”

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