First time to the Barrons site, it has a good article service in the dossier section, barrons.com , for a lot of stocks. Their description of Parson's operations study was limited that it merely confirmed that the new plants did or will meet the future demand of OREX. However, Volume today and the slight increase in price would suggest that some may be getting more out of the report.
An interesting article in the Barron's home page mentioned that in after market trading, OREX dipped to 7 3/4, I wonder if all this price movement yesterday did shake some people out or was the work of a brokerage firm building a position in OREX.
So one could say that Parson's Report addresses one side of the OREX equation, (ie. supply) now we just need demand. CFO Harlow told me that Isolyser has 70 washers placed and that as a normal course of business new contracts are being signed (ie. demand) how much demand they can create is the remaining question. Following is this issue as laid out in the most recent 10Q, note it is portions taken out of context.
The Company's future performance will depend to a substantial degree upon market acceptance of and the Company's ability to
successfully manufacture, market, deliver and expand its OREX Degradables line of products. [portions cut]. Pending increased utilization of the Company's existing manufacturing capacity at its Arden and Abbeville OREX manufacturing facilities, the Company will continue to encounter low profit margins on sales of its OREX Degradables products. During the 1996 Quarter and Period the Company manufactured more OREX Degradable towels than were sold. While the Company plans to sell such surplus towels, no assurances can be provided that the Company will be successful in such efforts. The possible inability of the Company to sell its towel supplies at acceptable prices could materially adversely affect the Company's operating margins and profitability.
End of 10Q cut
My uneducated reaction to the concern of the HMO type supply providers would be that they still represent a small portion of the market, There is a great deal of untapped markets in the U.S. and Europe. Also while an HMO type/one source supplier may reduces Isolyser's profit margins a large contract through such an outfit could be a quick fix for the need to generate more sales. But if OREX is in fact unique then the only question is convincing purchasers of the benefits, and a mega supplier will be courting OREX.
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