Some more news...
Thursday April 16, 1:06 pm Eastern Time
VISX profit puts eye laser industry in focus
NEW YORK, April 16 (Reuters) - Laser eye treatment stocks rallied on Thursday after
better-than-expected profits at VISX Inc. (VISX - news) injected further credibility into a sunrise industry
as public confidence in the procedure grows.
''VISX's earnings validate the growth in the procedure that we have been talking about,'' said Charles
Olsziewski, a first vice president at PaineWebber.
VISX's net income in the first quarter of this year rose to a record $0.58 per share, up from $0.17 per
share in the same quarter last year.
The treatment of near- and far-sightedness using lasers began about three years ago.
PaineWebber estimated that 70,000 people were treated in the United States in 1996, rising to 200,000 in
1997, with further growth to an estimated 350,000 this year, and to 500,000 to 550,000 in 1999.
VISX shares patents for photorefractive keratectomy (PRK) laser technology with Summit Technology Inc.
(BEAM - news) but both compete in the market for customers, Olsziewski said.
The two companies sell technology that uses lasers to correct myopia, or near-sightedness.
By midday Thursday, VISX's shares were up nine at 40-15/16, after hitting a new high of 44-1/4.
All the main stock indices were lower.
Summit Technology is expected to earn $0.02 per share in the first quarter, according to First Call Corp., a
Boston-based company that tracks analysts' estimates of earnings. Summit gained 1-1/8 to 5-7/8. VISX
has about 70 percent of the U.S. market for lasers, with Summit serving the balance.
George Koo, an analyst at Burnham Securities, said there are ''some issues'' regarding the U.S. Federal
Trade Commission, which believes ''that the two companies are dominant and possibly could be viewed as
a monopoly.''
In March, the FTC complained that VISX and Summit were colluding to fix prices to establish a monopoly
that allegedly overcharged consumers to the tune of $30 million in 1997.
The FTC also alleged that VISX committed fraud to secure a patent for laser technology.
Summit and VISX, the only two U.S. companies to receive Food and Drug Administration approval for the
eye laser technology, dismissed the accusations.
Summit and VISX share their laser technology patents through a partnership known as Pillar Point Partners.
PaineWebber's Olsziewski said Autonomous Technologies Corp. (ATCI - news) was expected to be the
third company entering the laser equipment market by the end of this year.
Autonomous' stock was off 1/16 at 5-1/8.
There is a potential laser-treatment market of 60 million near-sighted people and 50 million far-sighted
people in the United States, Koo said.
''It's a lifestyle change,'' he added. ''The outlook is going to be quite positive as vision-correction (surgery)
continues to gain acceptance.''
Not surprisingly, the industry has met some opposition from the optometrists because people trash their
glasses after their sight has been corrected by laser technology.
But not all potential patients can afford the $4,000 price tag for the treatment. And some people are
squeamish about eye surgery. VISX and Summit may be making money from selling equipment and
receiving a $250 royalty for each procedure, but those who actually provide the service must start turning a
profit before the emerging industry as a whole is on a sure footing, analysts said.
''The service providers are starting to become profitable, but they have huge debt-service requirements,''
Koo said.
Service providers include Laser Vision Centers of America (LVCI - news), and LCA Vision Inc. (LCAV -
news).
Laser Vision's stock was up 15/16 at 11-5/16. LCA's stock was up 5/16 at 2-5/8. |
