Sometimes You Can Know Too Much,
My problem is that maybe I know too much right now about
this company, and am unable to reverse direction and buy
back or add any shares.
Last quarter, Endosonics actually missed revenue projections.
Wessel, Arnolds was looking for $7.0 million in revenue, and
ESON only did $6.3 million. Robertson, Stephans (?) was
looking for $6.5 million so they missed there too. As stated
in earlier post to Sam, demand for older IVUS catheters is
falling as demand for newer more technically advanced ones
is rising, so it's not a total win-win situation. And based
on current situation, Wessel is actually projecting flat
revenue growth (if I remember correctly) for this quarter.
My fear is that this rise in share value could be a typical
"pump and dump" scenario. I'm really leary about the fund
sell-off that took place on 6/23. What I look for is not
just news events about a company, but also how the stock
reacts to that news. For a positive Barron's article to
surface, and then a massive sell-off to take place the
following Monday, and Tuesday, which took the stock within
a hair's breath of the yearly low is not good in my book.
Yes, I agree that funds make mistakes all the time, but
also, big holders generally represent smart money. And
if they sold out then I want to know why. Your thoughts,
and anyone else's on this would be appreciated. Right now
I'm in the dark.
The other thing I kinda don't like, is that Roger Salquist
was recently elected to be chairman of the board. Salquist
formerly headed Calgene, the agribio-tech company that
produced the Flavr Tomato. My superficial impression of
Calgene is that he ran it into the ground, and ended up
selling it for a pittance of it's true worth to Monsanto.
Salquist has a lot of Stanford Business School connections,
but he still hasn't proved to me he can successfully run
a company. And what the heck does he know about IVUS
anyway? so why was he chosen and what does he bring to
the table? In my book, not much. So that's another
mark, or prejudice I now have about owning stock in this
company.
As to the pump and dump stuff, what I meant, is that the
market makers may have had to have taken on a lot of
unwanted inventory in trying to maintain some semblance
of an orderly market when the stock sold off 6/23. So
they may be pumping up the stock by floating unsubstantiated
rumors of a JNJ buyout, drawing in public buying, and then
dumping the stock, whereupon stock would fall due to it's
own gravity.
I'm also worried about the Guidant, Hewlett-Packard
agreement. They've agreed to collaborate on producing a
next generation IVUS. This combination is what may have
driven the sell-off. H-P already competes with ESON and
their engineering excellence has few peers. Guidant is
also a very formidable and technologically accomplished
competitor, and constitues a new player to IVUS area.
Their depth of knowledge and focus in the
cardiac area may actually be superior to Endosonics.
That's what worries me so much about having a Roger
Salquist in charge. He has no knowledge of the cardiology
area, and his business record going by Calgene, was a
disaster. Anyway, the Guidant, H-P IVUS is supposed to
be a higher frequency, and therefore better resolution,
ie imaging, IVUS.
It's earnings that are driving this market. I think ESON
is still 3 to 6 months away from getting their manufacturing
output and efficiency up. Your thoughts would be appreciated.
(now having said all that, watch the stock skyrocket now.) |
