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Biotech / Medical : Laser Vision Centers, Inc. (NASDAQ: LVCI)
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To: Zainul Hamza who wrote (339)11/30/1999 1:52:00 PM
From: W Shakespeare  Read Replies (2) of 413
 
After listening to the conference call, I have more faith in management's ability to play the "expectations game." The estimates for the company's earnings had dropped from a consensus 0.12 per share down to .11 per share due to analyst's stupidity. Hence, the company "surprised" the Street by simply having earnings come in where they should have anyway.
Management spent the entire call downplaying any raised expectations for the future. They downplayed the normal holiday season bulge in procedures. They mentioned price wars across the Canadian border. They talked of "uncertainty" in the industry. I'm sure all the idiot analysts sucked it in whole (my apologies to those intelligent analysts who follow the company and refused to downgrade based on price action).
It appears to me that the company realizes that any sustained upward stock price movement will be based on consistently exceeding expectations. Otherwise, the stock price will rocket and plunge in alternative fury. The way to maintain the surprise in earnings is to speak with caution to the gutless analysts who have zero understanding of economic and industry fundamentals. (Microsoft has been doing it for years.)
I found the company's discussion of an industry shakeout and consolidation to be interesting. However, I am skeptical of any such action in the near term. There is still too much business out there for everyone and there is still no pricing pressure to drive such a consolidation. Perhaps one or two years down the road.
I was also fascinated by the increasing pressure that LVCI seems to be putting on VISX to lower procedure fees. LVCI has only 10% of the market at present, so I think that they do not have enough leverage at this point. If they could pull off a large merger, perhaps the scales would tip more in their favor. However, I view such an event to be well down the road.
Finally, I look for the results of the next quarter to be excellent. The company will well exceed the dampened expectations and will see another rise in its stock price. I applaud those who had the sense to buy on this senseless price drop. Fundamentals always win in the end.
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