Technology News Per Bloomberg; Good Luck To All !
Tue, 07 Dec 1999, 2:31pm EST
Visx Shares Slump on Ruling That Nidek Didn't Infringe Eye-Laser Patents
By Marion Gammill
Visx Plunges on Ruling Nidek Didn't Infringe Patents (Update3)
(Updates share activity; adds lawyer comment in final
paragraph.)
Santa Clara, California, Dec. 7 (Bloomberg) -- Visx Inc.'s
shares fell as much as 44 percent after a U.S. International
Trade Commission judge ruled that its patents weren't infringed
upon by vision-correction lasers sold by rival Nidek Co.
Shares of Visx, the biggest maker of eye lasers in the U.S.,
fell 38 3/16 to 49 15/16 in early afternoon trading of 23.8
million. It was the most active U.S. stock and the second-biggest
decliner. The price drop wiped out more than $2 billion in market
value. The shares traded as low as 48 15/16.
Nidek, unlike Visx, doesn't charge doctors a fee for each
use of its lasers. If Nidek's laser stays on the U.S. market,
Visx's laser sales could be hurt, analysts said. About 950,000
eye laser procedures are expected to be done this year, more than
double the number in 1998.
``This is bad,' said Robert Faulkner, a Hambrecht & Quist
analyst. ``To the extent that Nidek continues to sell lasers
without charging the $250-per-procedure fee, the pricing
structure of the industry is increasingly at risk.' Faulkner
lowered his rating on Visx to ``market perform' from ``buy.'
Shares of Summit Technology Inc., Visx's main competitor in
the U.S., also fell, dropping 6 1/8 to 15 3/16 and earlier
falling as low as 15, a 30 percent decrease. Summit also charges
fees for use of its lasers.
Rising Acceptance
Laser eye surgery has increased in popularity among the
majority of U.S. adults who require vision correction. Before
today, shares of Santa Clara, California-based Visx had
quadrupled this year on expectations the demand for vision
correction surgery would keep expanding.
Laser makers are expected to receive about $350 million this
year from device sales, fees and other services, while doctors
and clinics that perform vision-correction surgery are expected
to receive about $2 billion in revenue, said Theodore Huber, an
Advest Inc. analyst.
The International Trade Commission is a federal agency which
looks into trade issues that affect U.S. industries. The news of
the ruling by Debra Morriss, an administrative law judge for the
commission, came after U.S. markets closed yesterday.
``We won all contested issues,' said Hiroshi Okada, a vice
president of a U.S. unit of closely held Japan-based Nidek. ``We
are very happy.'
Fee Per Use
Visx, Nidek and Summit, among others, sell lasers used to
reshape the surface of the eye to correct vision problems. Visx's
lasers require doctors to activate the devices for each use with
a card costing about $250.
Visx has received U.S. approval to market its lasers for
treating nearsightedness, farsightedness and astigmatism, a wider
range of approvals than Nidek has received. Nidek's lasers,
though, don't require a card to operate, meaning that the devices
are, in the long run, a cheaper option for doctors.
``We do not expect physicians to suddenly stop using Visx
and Summit lasers and stop paying fees, but we do expect many
that were daring enough to consider a Nidek laser to be
emboldened,' Faulkner said in a report.
Visx said it will ask the full commission to review the
initial determination. The company has 10 days to petition for a
review, and the commission then has 45 days to respond. If the
commission decides to review the ruling, a final determination
would be expected by March 6, Visx said.
Analysts aren't hopeful that the decision will be reversed.
``Typically, the full commission only looks to see if the
judge has made material errors in fact or in the law,' said
Advest's Huber, who lowered his rating on Visx to ``market
underperform' from ``market perform' today. ``There's not a
long history of initial decisions being overturned.'
If the commission upholds the judge's ruling, Visx has other
options, lawyers said.
``You can ask the (U.S.) President to change it,' said Bob
Kahrl, a patent litigator with Jones, Day, Reavis & Pogue. ``If
the President declines to change (the ruling), which is of course
the normal outcome, you file an appeal in the U.S. Court of
Appeals for the federal circuit.' |
