I think this was more of a hedge then desperation.
If the ITC and Patent office rule in their favor, VISX would collect fees from LASE, NIDEK, etc. to sell their product in the USA market. If VISX loses their patent authority, they today have taken steps to compete by lowering the royalties due from the LVC's, and therein move toward neutralizing the marketing strategy of competitors who charge no royalties. I still maintain that none of these laser manufacturers can exist long-term on hardware sales alone. Given their installed base and backlog of orders, I would think VISX is best set up to survive the
competition. The only weakness is the technology question!
If VISX continues to produce a high-grade, cost efficient machine, technically equal to other lasers, the (now) $100 royalty will not be enough incentive for the LVC's to switch. This is even more the case, given VISX's declaration to ramp-up procedure volume by more promotion.
I believe VISX anticipates a decrease in revenue short-term that they address by decreasing the share float. They are burning cash to maintain EPS. It should be interesting to see the multiple the market gives this stock in the future.
I see the LVC's are all up (I guess) on the royalty news.
(BTW)
I can understand the shorts and MM's doing what they have to screw this stock, but what gets me PO'ed is the action of USA Government in given away technological positions to foreign competition without them having to pay an innovation cost. I'll be watching to see how this patent issue is resolved. |
