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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: taxman who wrote (12328)	12/7/1999 11:30:00 PM
From: johnzhang	Read Replies (2) \| Respond to of 54805

RE: VISX Taxman, First, from the view of a potential patient of laser vision correction procedure, today's news is a good one since it means the cost will come down. Now, from the view of GG, I think the game's nature has changed from gorilla to royalty. The patent ruling makes the standard or architecture of laser vision correction an open one. John

To: taxman who wrote (12328)	12/23/1999 2:15:00 PM
From: StockHawk	Read Replies (1) \| Respond to of 54805

Hello to all. I'm just back from vacation and am about half way through reading the 1500 posts to catch up, so please forgive me if anything I am presenting has already been mentioned. On 12/7 taxman asked about VISX: >>i would be most interested if those who posted on this topic would continue the dialogue based on todays news so one could have a better idea on whether to pick visx up at bargain prices or stay away.<< And someone responded that the architecture of laser vision correction is now an open one. Several other comments here seemed to agree with that. I do not. VISX has not lost the war here, they lost one battle. Here are some items to consider: from Goldman, Sachs & Co. Investment Research * * ITC finds Nidek not to infringe, VISX fundamentals intact; TB * * *************************************************************************** * We are maintaining our trading buy on VISX shares. The administrative * * law judge for the ITC released her Initial Determination last night that* * Nidek was found not to infringe on VISX's patents. At this point, there * * is little information as the decision was delivered late yesterday. * * However, we do know that VISX (1) can appeal to the U.S. Court of * * Appeals, (2) VISX core method patents remain valid and enforceable until* * a Court of Appeals ruling, and (3) the company has saved its stronger * * patents for future suits. While the ITC decision was not a positive for * * the company, we note that the core patents remain in-place, there is no * * change to our 1999 and 2000 EPS estimates, and market growth is strong. * ************************************************************ other information: * VISX has indicated that it will now petition the full Commission of the ITC for a review of the Initial Determination. If the review is granted, the Commission is expected to issue its Final Determination by March 6, 2000. If a review is denied, the Initial Determination will become the Final Determination. Any Final Determination is subject to a review by the United States Court of Appeals for the Federal Circuit. We expect that any appeal process will take several years, so the overall patent landscape remains intact. As a result, the current competitive landscape remains status quo. * It is important to note that VISX sued Nidek for infringement on two apparatus patents, L'Esperance and one of the Trokel patents. As part of its overall legal strategy, VISX did not use its strongest patents, including the base Trokel patent that covers the method of ablation of corneal tissue. The stronger intellectual property was saved for use in a separate case against Nidek that is progressing through the Northern District of California courts. Thus, Nidek may have escaped this court appearance, but is facing far stronger method patents, rather than the apparatus patents used in the ITC suit. * Until there is resolution on several patent infringement suits, including an appeal at the ITC and the Northern District of California, VISX's patents remain valid and enforceable. As a result, we see little change to the competitive position for VISX. The company will still collect a $250 per procedure fee for surgeries performed on its market leading installed base. In addition, a strong technology base, superior service, and sophisticated physician support should help VISX maintain market share. With our 2000 estimate of $1.75 not assuming any revenues from license agreements and modest growth in the market to 1.3 million procedures, we have no reason to change our forecast based on the ITC decision as business is status quo. * In our opinion, a key to the near-term performance of VISX shares will be whether Bausch & Lomb, and to a lesser extent LaserSight, sign agreements to license the company's core intellectual property. With the core Trokel patent still valid and enforceable, we believe that there is a very good chance that both companies will license the technology from VISX. If a licensing agreement is not struck, we suspect that VISX will be aggressive in protecting its patents. ===== from the VISX thread on SI: To: Paul Kelly who wrote (1446) From: Ram Seetharaman Friday, Dec 17, 1999 5:40 PM ET Respond to Post # 1448 of 1453 Just saw @ 5:36 P.M on CNBC that VISX is at $ 62 in after-hours trading due to news that FTC is dropping the patent scrutiny against VISX. ===== and To: Charlie Smith who wrote (1449) From: MGV Friday, Dec 17, 1999 11:54 PM ET Respond to Post # 1450 of 1453 Charlie and others - The FTC is dropping its appeal because the PTO (Patent and Trade Office has concluded its review of the '388 w/ no material change in the breadth and strength of the patent. This conclusion is in the brief that the FTC filed to withdraw its appeal. Certainly, this is very bullish news for VISX. Although it will not impact the ITC decision (The PTO review at the time of the ITC trial precluded VISX from wielding it before the ITC against Nidek), it does serve effectively to render the ITC case moot insofar as the ITC decision was being interpreted to signify that the VLNC intellectual property was toothless. VISX may not have obtained the injunction in summary process before the ITC but, it now holds a reconfirmed potent weapon to obtain infringement remedies (treble damages I memory serves). The '388 is a "big gun" method patent that VISX can and will use to enforce claims against infringement by Nidek and any practitioners using Nidek technology w/o a license. It will likely be employed immediately in the N. Dist. Calif. case. The market did not interpret the significance of the news today. It was an opportunity with new information to exploit in my opinion. I hope some of you did. The next catalyst will be the license with B and L. I reckon the agreement will be somewhere at or north of $200 per procedure. My guess is $225. When that happens, the sentiment will be as the ITC case never happened. That is, the multiple will return to 2X forward earnings and earnings estimates will go up. Eventually, VISX, like QCOM will become a pure IP play. (Recall what happened to QCOM immediately after it announced it would be shedding its handset division). There will come a time when VISX will no longer manufacture laser systems and all of its revenue will be procedural key card fees and license revenue. There is significant additional multiple expansion to be derived then. ===== As I believe Lindy has said in the past you can never bank on how a court case will turn out, and as Mike said - anything can happen. As the manual teaches, it is at times of setback that one should coldly evaluate the facts and see if the market's reaction is correct. An over-reaction could be a buying opportunity. StockHawk