from the Globe and Mail :
For a laser vision play, keep an eye on TLC
Compiled by Fabrice Taylor.
Wednesday, January 17, 2001
It's looking grim for Icon Laser Eye Centers and its potential merger
partner, Lasik Vision. But they're just reaping what they've sown. It
was they, and a handful of imitators, who undermined the profitability of
the laser eye surgery business with their deep discount approach.
Now, inevitably, they've become victims of the price war.
Amazingly, they cling to the notion the volume approach is salvageable,
which, given their balance sheets, confirms they'll disappear before long
unless they change their minds.
Either way, it's good news for TLC Laser Eye Centers. Having
recognized early that the aggressive pricing strategies of its upstart rivals
couldn't last, TLC stuck to its guns, maintained its prices and high levels
of service, and battened down the hatches. It has done a reasonably
good job of it, putting the finishing touches on a restructuring that
involved writing off non-core assets, cutting costs and improving
efficiencies. With $60-million (U.S.) in cash at last count, TLC is in good
shape to weather the last stages of the storm, which will see more
consolidation, more bankruptcies and more stable pricing.
There are risks, of course, namely that fears of a slowing economy could
push consumers to postpone treatment. Surgery volumes fell in the
United States in the second half of last year. But TLC says its volumes
are beginning to pick up, and it's very feasible that the company will
return to profitability within two or three quarters. The potential for laser
surgery is huge, and, TLC is the best way to play it. |
