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Guidant lower after pleading guilty to felonies

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Shares of Guidant (NYSE:GDT) $40.89 -5.43% have been released for trading after a sell order imbalance saw the stock halted. The Wall Street Journal has reported that the company reached a settlement with the U.S. Department of Justice into matters related with its Endo Vascular Technologies unit, which had the company pleading guilty to 10 felony counts.

The felony counts come from the company making false statements regarding its Ancure Endograft System used in the treatment of abdominal aortic aneurysms, in which company officials failed to fully report to the FDA, problems experienced by doctors in installing the Ancure device, which may have lead to patient' deaths.

Under the terms of the agreement, Guidant's Endo Vascular unit will make payment of $43.4 million and an additional $49 million civil settlement to the government.

As I (Jeff Bailey) understand this news, this does not involve the company's drug-coated stent products.

Early analyst comments see today's news as "no news" and not adversely impacting GDT's operations, however some analysts remain uncertain as to the company's exposure to civil lawsuits bought on by patients that have received the Ancure Endograft System.

The major market indexes have seen a slow drift lower as the session has worn on with the Dow Industrials (INDU) 9,148 -0.37% lower by 37 points, the S&P 500 Index (SPX.X) 992.62 -0.48% off 2.3 pints, and narrow NASDAQ-100 Index (NDX.X) 1,223 -0.4% down 4.9 points. The NASDAQ-100 Tracking Stock (AMEX:QQQ) $30.41 -0.36% is now lower by 11 cents and turns just over 66 million shares. The broader NASDAQ Composite (COMPX) 1,647 +0.06% is the only major index currently hanging onto gains.

Sector action near the close of trading, which was broadly positive in the morning trade is now painted with red. Sector losers have the Oil Service Index (OSX.X) 98.55 -3.21% leading sector declines after setting a 52-week high in the morning trade, with the Dow Jones Home Construction Index (DJUSHB) 463.87 -1.85% pulling back from a morning high of 475.30, which was a consecutive all-time high for this group of stocks.

Sector winners are limited with only the Airline Index (XAL.X) 51.52 +1.45% holding a gain greater-than 1%.

Market internals have softened a bit, but remain positive on the NYSE. Advancers still hold the upper hand on decliners by a 16 to 15 margin, but off from their 02:00 mark of 18:14. Meanwhile, NASDAQ breadth that had reached even at the 02:00 mark, is now back at 01:00 PM levels with decliners having the edge at 17 to 14.

Ahead of this evenings earnings reports, software maker Adobe Systems (NYSE:ADBE) $35.91 +0.36% holds a 13-cent gain, while Oracle (NASDAQ:ORCL) $13.30 +0.3% shows a 3-cent gain. Earlier today, ORCL acquisition target PeopleSoft's (NASDAQ:PSFT) $17.33 -1.65% Board of Directors said it would advise shareholders to reject ORCL's unwelcome bid, but would leave the decision to a final shareholder vote.

Jeff Bailey

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