AB REcall

[Guest guest]

Hi Ruth,

Yes, I saw that news about the AB recall, too. So I went to Google,

and entered " Cochlear Implants " One of the first article to pop up was a

news release from Reuters in Australia about the recall. Yes, it is the

4th time Bionics has had to recall in the last 3 years.

This is a follow up to yesterday's article.

Here's what the news report says:

Australia's Cochlear jumps on rival product recall

Friday 10 March 2006, 9:22pm EST

By Sonali

MELBOURNE, March 10 (Reuters) - Shares in Cochlear Ltd. (COH.AX: Quote,

Profile, Research), the world's top maker of hearing implants, soared 17

percent to a record high on Friday after its rival Advanced Bionics

voluntarily recalled some of its implants.

In an " urgent recall " letter dated March 8, obtained by Reuters, Advanced

Bionics told clinics that several of its implants had failed recently due

to internal moisture, which it blamed on one of its two suppliers of a

specific part that connects the sealed section of the implant with an

electrode.

Advanced Bionics, owned by Boston Scientific Corp. (BSX.N: Quote,

Profile, Research), said it would send out replacement implants with

parts made by the better supplier.

Cochlear Chief Executive said it was too early for the

group to upgrade its full-year profit forecast on the back of its rival's

problem, as it was not yet clear how quickly Advanced Bionics would be

able to replace the faulty implants.

" It's a bit premature to make any assumptions about that at this stage, "

told Reuters.

" The major benefit to us is the further reputational damage to Advanced

Bionics rather than a particular market share move. "

Cochlear shares surged 17.2 percent to a new peak of A$55.01 in a flat

market, surpassing the previous high hit in November 2001.

A recall of Advanced Bionics' HiRes 90K implant in 2004 due to moisture

problems helped Cochlear reclaim U.S. market share last year, which the

group has built on further this year to around 70 percent with its newest

implant, the Nucleus Freedom.

It was not clear how many implants Advanced Bionics had recalled this

time, said.

Cochlear would have a better idea about potential gains when it hears

from clinics whether they want more Cochlear implants or are just

postponing operations while they await replacement implants from Advanced

Bionics, he said.

Spokesmen at California-based Advanced Bionics and the head of Advanced

Bionics' auditory division, , did not respond to calls, and

there was no note on the group's product Web site (www.bionicear.com)

about the recall.

" This is the third recall in four years, and is a disaster for

reputation, " Citigroup said in a note to clients.

" We would expect Cochlear to gain the majority of the short- term market

share and secure medium-term market share as ABC's reputation slides, " it

said.

Cochlear forecast in February that its core annual earnings would grow by

37 percent to at least A$80 million ($58 million) this year.

" You can assume people will upgrade their numbers because this will help

Cochlear hold on to, if not gain, market share, " said an analyst with a

fund manager who declined to be named.

($1=A$1.37)

© Reuters 2006. .