Bob,
Endosonics - conversation w/Ken Kam today:
Comments included:
Endosonics was depending on sales from J & J /Cordis. Their stent salesmen had 90% of the US salesforce. salesforce monopoly. Endosonics had earnings revenue of 40% .
Since the fourth quarter, there are two competitors and share went from 85% to 25%. The salesforce is demoralized. J & J said we have to save our own products and not Endosonics. Can't blame J & J.
Clinically, the use of the stents have increased. The need is growing. But Endosonics must get its own salesforce. Bought Cardiometrics which has a salesforce. They are transitioning from one salesforce to another. There should be two quarters of transition. Hold one year. The fund has an investment horizon of two years. Today, it is a fire sale. There are other medical companies that have no revenues. Endosonics is close to breaking even, best in its class. If it cannot work, Arterial Vascular may buy. It would make sense to sell to them. Endosonics has the balloon catheter which AV does not have. Endo may sell for the right price. They are doing everything they can to build a sales force. Doctors are using more of this product every week.
Formerly, ESON was paying Cordis salesmen and their own reps. By getting rid of Cordis and getting their own sales force, they will save money. This quarter's results are bad, 3rd will be bad, but the 4th can be a good quarter. If they mess up, they will be a screaming acquisition. They are doing the right thing now.
Must fix their selling problem. Co. has a lot of potential. Not much downside. Next quarter could be ugly, Interpreted as a rocky transition by the marketplace. 16,000,000 shares out, less than $1 million capitalization. Thinks they are the bottom now. could be buying opportunity.
Regards,
Sam |
