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Biotech / Medical : Laser Vision Centers, Inc. (NASDAQ: LVCI)
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To: W Shakespeare who wrote (200)3/3/1999 7:03:00 PM
From: Walter in HK  Read Replies (1) of 413
 
LCVI vs VISX. Some thoughts on the relative merits (before considering price) I used to build oxygen plants for the Industrial Gases businesses - the ones that sell liquid oxygen to hospital tanks, argon for welding and all that, in small quantities you see cylinders on trucks but in large quantities the gases separated from air (oxygen, nitrogen, argon) are distributed by pipeline or as liquids.

Anyway, in the Industrial Gases business, people that sell the gases make much more money than the engineering companies that build the plants. Barriers of entry into the Gases business are capital intensity of the producing plant and the distribution which takes again as much money.

So, the thought occurs, is LCVI a better business than VISX's ? At first I thought, yes. But then I realized that in the gases business a plant runs for 15 or 20 years. The process was invented in 1907 and has been incrementally improved in dozens of ways, but a plant built in 1979 is still very efficient and no longer carries depreciation.

My guess is that VISX has an improved model every year and LVCI has to earn the depreciation.

That is before considering the price of the stock, just trying to understand the nature of the business. I am happily sitting on some 1995 VISX stock and discovered LVCI too late. Wonder at what greedy price I should buy.

If I had bought at 7 like you, I wouldn't sell. But watch it for signs of problems. (I will check the depreciation in the 10Q) Did you check with ophthos (ophthalmologists) how this is working out with them ? Are they wandering around with the trucks ? I mean you got ot be trained, can't take the nearest ophtho to use the VISX machine.

Walter
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