As Boeing Takes Health Care Charge, Should Investors Sell?


Boeing (BA) announced Wednesday that it would take a 20 cents a share charge against its first-quarter 2010 earnings related to the recently signed health care legislation. Boeing is joining a flotilla of other publicly traded companies that are taking this charge, which accounting rules require companies take now even though the actual cost of the change will not take effect until 2013.

The first-quarter charge will slash expected earnings per share by 23%.

In 2013, Boeing will lose a $150 million tax deduction it had previously enjoyed related to "prescription drug benefits provided to retirees and reimbursed under Medicare." Many other companies have already beaten Boeing to the punch. Among them are AT&T (T), which will take a $1 billion charge, and 3M (MMM), whose hit will be between $85 million and $90 million.

With so many publicly trade companies in line to take similar hits to earnings due to the partial closing of this tax loophole, should you sell all your stock? If you don't like the health care law and want to lodge a protest by selling your shares in U.S. firms, there is nothing stopping you from doing it. But it is interesting to note that in the week since the health care law was signed on March 23, the Dow and the S&P 500 have maintained their upward trajectories.

And in the case of Boeing, AT&T and 3M, the accounting charges represent tiny fractions of their market capitalizations. Specifically, Boeing's charge is 0.27% of its $54.8 billion market capitalization; AT&T's charge is 0.66% of its $152.5 billion market cap; and 3M's charge is 0.14% of its $60 billion market capitalization.

So if you value your financial health, don't sell your stocks because of President Obama's political victory.