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Given Imaging, better technology than management
16.4.06 | 11:30 By Yoram Gavison
It is a dramatic event for a company to replace its founder. Last week Given Imaging (NASDAQ: GIVN) announced the appointment of Nachum "Homi" Shamir, formerly the chief executive of Scitex (Nasdaq: SCIX) group company SDP, as its president and chief executive in the stead of Gabriel Meron, who is taking over as executive vice chairman.
Upon announcing the replacement, Shamir and Meron mentioned the need for an experienced CEO to improve Given Imaging's marketing, sales and its market capitalization. The company is a pioneer in noninvasive endscopy, having developed a miniaturized camera in a capsule that patients swallow to diagnose the causes of intestinal tract bleeding. The PillCam travels through the digestive system, wirelessly sending images to an external receiver worn on a belt. The images are processed on a Given Imaging workstation and the capsule is excreted.
Breakthrough technology to be sure, but Given Imaging announced yet another earnings warning, the fourth since its initial public offering in October 2001. The warning reinforces the uncomfortable feeling that the management was inferior to its technology.
Given Imaging stock
Given Imaging warned that first-quarter sales would be only $20.2 million, apparently. That was almost 4% below the bottom level of its target range for the quarter. It was 12% below the upper level of that range. Analysts had been looking at $22.8 million sales in the first quarter and $108 million for the year 2006.
The company blamed the shortfall on expanding its U.S. sales staff by 50%, which entailed a lot of training and moving the sales talent from territory to territory.
Insisting that it can still meet earnings forecasts for the year, it cut its first-quarter profit forecast. In fact it now expects to lose 5 to 7 cents per share in the first quarter, and to earn 11-21 cents per share for the year on turnover of $110-120 million.
The fact that Given Imaging hasn't changed its guidance for the year indicates fond expectation that the second to fourth quarters will be better than it had previously anticipated.
For the last quarter of 2005, Given Imaging reported netting $3.5 million on turnover of $24.4 million.
haaretz.com
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