Wednesday, December 28, 2005

Software Problems Shake Up Guidant/J&J Merger

How expensive is embedded software? At one point, software bugs were going to cost Guidant $6.4 Billion (sic). There were some manufacturing problems as well, so it was not just software. But software problems were a major contributor to the company's decline in value and subsequently the lower value of J&J's acquisition offer. Now Boston Scientific is offering $25 Billion so the loss may only be $400 Million. Still a lot of money.

The software is question is in Guidant's implantable heart defibrillator product. Apparently the problem is that the devices stop working. Sounds pretty serious. Amazingly, the company did not warn doctors about the problem right away. The FDA does not like that.
We write a great deal about the importance of embedded software on device performance and company performance as well. Unfortunately it takes a major event for folks in the upper ranges of management to see light as well. Bet that $6.4 Billion woke them up.