Lilly's Job Cuts Not Enough for Wall Street; Another Merger Suggested; CEO Lechleiter Eats a Steak

Eli Lilly's announcement that it wants to get rid of 5,500 employees to get $1 billion in cost savings appears to have had no effect on its stock. Why would that be? Shouldn't Wall Street be rejoicing at an extra $1 billion heading toward the net income line and not reps' salaries?
Turns out some on Wall Street think the cuts are not enough or might hurt Lilly's ability to generate its own revenues, at least according to a note from Leerink Swann analysts Seamus Fernandez and Kathryn C. Alexander. Of the job cuts, they said:
... does little to shore up LLY's post 2011 revenue visibility.
... we believe LLY must deliver substantial pipeline surprises (only major pipeline catalyst appears to be Byetta LAR in 2010) or a mid-sized acquisition to shore up its future earnings ...
... Headcount reductions or health care reform could negatively impact our revenue assumptions.
Here's the market's reaction to the announcement. As you can see, it seems to have made almost no difference:

(Click to enlarge.) Note that the Leerink folks think that Lilly's acquisition of ImClone will not be enough to sustain the company in the long run. Perhaps it's time for another look at Byetta partner Amylin? Whatever happens, it suggests these 5,500 will not be the last of the layoffs. If Lilly did buy another company, it would want to get the efficiencies that come with eliminating duplicated tasks -- and that means more job losses.

Separately, this blogger didn't like the fact that CEO John Lechleiter sat down at a steak dinner and cracked jokes after announcing the layoffs:

Lechleiter gave brief remarks and got a laugh when he said that he expected a special evening but then said that the dinner was "the highlight of my week."
This man just laid off 5500 people from his company
... Its the casual meanness of the remark that galls me so. Here's a guy bitching about his bad week because he got to keep his Big Pharma CEO gig with the tens of millions paycheck, gold plated health care benefits and all the perks of office while he destroys the livelihood of thousands of area workers.