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Biotech / Medical : VISX
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To: Charlie Smith who wrote (1649)2/23/2000 11:35:00 AM
From: MGV   of 1754
 
This is definitely a scorched earth tactic. VISX knew it would absorb a big hurt with this approach versus an incremental or tiered approach to price cuts. It believes the hurt will be bigger on competitors. I think it is a reasonable belief.

VISX is guiding to 1.55 Million total procedures in the market this year. Apparently it is guiding to $1.35-1.40 in earnings in 2001. (Remember that the share repurchase can add as much as 15% to the bottom line.)

The information I hear is that this decision was independent of any new information regarding the PTO reissue or the ITC review. To a certain extent, both decisions are much less significant now. At $100, the intellectual property value is less important. Service and range of applications is more important.

I also hear street speculation that B&L, absent a take out of BEAM will license VISX for the $100 and charge $125.

Visibility is low here but so is the price. I think the low visibility is more than discounted in the price. I think it may go lower over the near term (because of the very low street estimates and the type of sentiment we saw on this thread last night) and will buy when it does. I expect a 12-18 month double on these purchases.

The bottom line for me is I am a believer in the continued growth in the LVC procedure If I am right about that, the move by VISX was the right move and it will benefit. Lets see if I'm right.

Charlie, if you are B&L, I think you buy VISX before you buy anyone else.
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