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Chart: Wyeth Stock Price

The bad news keeps coming for Merck Chairman and CEO Raymond Gilmartin. On July 9, Merck (MRK) was forced to delay for a third time the initial public offering of its pharmacy benefits arm, Medco Health Solutions. The deal to sell nearly 20% of Medco to the public, postponed indefinitely, received a cool reception, due in part to concerns over Medco's aggressive accounting policies. The company included billions of dollars in copayments by consumers as revenue even though the payments went directly to pharmacies. Merck has said the policy had no impact on earnings and complied with generally accepted accounting principles.

Gilmartin, 61, has other headaches. Patents are expiring on some big drugs. And the new product pipeline remains weak, investors say. "The company has underinvested [in research and development]," says Lloyd Kurtz, health-care analyst at money manager Harris Bretall Sullivan & Smith, a Merck shareholder. Despite the problems, though, Merck says it still plans to spin off Medco. Another big jolt for the beleaguered stock market: Qwest Communications International (Q) confirmed it is the subject of a criminal probe. Neither Qwest nor the U.S. Attorney's Office in Denver would elaborate on the investigation. The company has previously acknowledged that its accounting is the subject of an investigation by the Securities & Exchange Commission. The latest news caused the stock of the struggling Denver-based telecom company to lose more than a third of its value on July 10 and helped prompt a wide-ranging sell-off. Management intrigue never seems to end at the supposed Bible of good management, the Harvard Business Review. On July 8, Publisher Penelope Abernathy abruptly quit. Her employers say her Group Publisher job was eliminated as part of a restructuring. But insiders say Abernathy is being punished for recommending an aggressive response to a scandal earlier this year surrounding an affair between former Review editor Suzy Wetlaufer and former General Electric Chairman Jack Welch. Wetlaufer, who was writing a story about Welch, quit in April. Harvard Business School Publishing's new CEO, David Wan, insists "the Wetlaufer issue had nothing to do with the way I wanted to organize the company." Standard & Poor's said it will remove all seven non-U.S. companies from the large-cap S&P 500, the world's most widely benchmarked index, at the end of trading on July 19. It will replace them with seven U.S. corporations. On the out list: Royal Dutch/Shell (RD), Unilever (UL), Nortel (NT), Alcan (AA), Inco (N), Barrick Gold (ABX), and Placer Dome (PDG). S&P said foreign companies often cause tracking errors between the index and the markets they intend to track. Also, higher transaction fees in foreign markets make it more expensive for investors to follow the index. The newcomers are UPS (UPS), Goldman Sachs (GS), Prudential (PRU), Principal Financial (PFG), as well as three tech companies--SunGard Data (SDS), Electronic Arts (ERTS), and eBay (EBAY). S&P, like BusinessWeek, is owned by McGraw-Hill. Has the telecom industry bottomed out? That's what investors were asking when legendary moment-picker Warren Buffett announced a big bet on Level 3 Communications (LVLT) July 3. Buffett's Berkshire Hathaway (BRK) joined Level 3's No. 2 shareholder, Legg Mason Funds Management, and Longleaf Partners Funds to invest $500 million in the company. Buffett had professed an aversion to all things telecom. But in this case, he said in a statement: "Level 3 is well equipped to seize important opportunities." The stock surged 62%, to $4.70, in the three days following the announcement. The IRS has sued accounting firms BDO Seidman and KPMG LLP to force them to disclose information about tax shelters sold to clients. The Internal Revenue Service says promoters of shelters are required to disclose information about both the schemes and the clients who buy them. The firms insist that the information is confidential. Over the past year, the IRS has requested information on 148 shelter arrangements from 11 different promoters. In late June, PricewaterhouseCoopers agreed to pay an undisclosed fine and hand over shelter documents. -- AT&T (T) shareholders on July 10 gave their blessing to the proposed merger of its AT&T Broadband cable operations with Comcast (CMCSA).

-- EBay (EBAY) announced it will buy Internet payment processor PayPal for $1.5 billion. The deal is expected to make eBay's online transactions more seamless.

-- Shares of bankrupt Kmart Corp. could be delisted by the New York Stock Exchange within six months if the average price stays below $1, the company says. Wyeth (WYE) shares fell 24% to $37.30 on July 9 after a much-anticipated study revealed that its hormone-replacement therapy product Prempro raised the risk of breast cancer and heart disease. Analysts expect the news will cause many women to avoid it, eroding sales of a $2 billion franchise at Wyeth and clipping earnings growth.

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