Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Options -- Ignore unavailable to you. Want to Upgrade?

To: the options strategist who wrote (1392)	1/20/2000 7:51:00 PM
From: taxman	Read Replies (2) \| Respond to of 8096

Santa Clara, California, Jan. 20 (Bloomberg) -- Shares of Visx Inc., the No. 1 maker of eye-surgery lasers, fell 29 percent after the company said U.S. doctors used its devices less than expected, causing fourth-quarter revenue to drop from the third quarter. Shares of Visx, which reported fourth-quarter earnings yesterday, fell 13 1/8 to 32 1/4 in Nasdaq Stock Market trading of 21.3 million, seven times its three-month daily average. It was the 10th-biggest percentage decliner on U.S. markets. Visx said there was little or no increase from the third quarter in U.S. operations performed with its lasers. Fourth- quarter revenue fell 5.7 percent to $75.1 million from $79.7 million in the third quarter. Analysts and investors are worried that growth in the vision-correction market, which caused Visx shares to more than double last year, may be faltering. ``The last chapter of the book was a stinker,' said Kurt Kruger, a Banc of America Securities analyst with a ``buy' rating on Visx. ``It's shaking the very pillars of our thesis on the company: That it's a rapidly growing company that's the best vehicle for a rapidly growing market.' It was the first time since 1997 that Visx revenue has fallen from one quarter to the next. Kruger cut his earnings estimate for the year to $1.69 a share from $1.73, and his revenue estimate to $309.5 million from $329.7 million. Visx is expected to earn $1.74 this year, the average estimate of analysts polled by First Call/Thomson Financial. License Fees In addition to selling lasers, Visx charges a fee in the U.S. for each surgery performed with its devices. Analysts had expected the number of U.S. operations performed with Visx lasers to increase by more than 10 percent from the third quarter. Visx didn't disclose the number of procedures performed or the exact revenue from license fees. Kruger estimated that about 190,500 operations were done in the fourth quarter in the U.S., compared with 186,162 in the third quarter. The company had about $6 million in one-time software-upgrade revenue in the third quarter, which it reported as part of license, service and other revenue, said SG Cowen analyst Matthew Dodds. Revenue in that category fell $5.5 million in the fourth quarter, while laser sales rose about $1 million. `Sequential Trend' ``People are concerned with the sequential trend,' said David Gruber, a Lehman Brothers analyst with a ``buy' rating on Visx. ``Year over year there's been phenomenal growth.' Fourth-quarter revenue of $75.1 million was 79 percent higher than the $41.9 million in the year-ago quarter. Shares of Santa Clara, California-based Visx fell as low as 38 1/2 yesterday after the close of regular trading, after the company said fourth-quarter net income rose 50 percent to $25.8 million, or 38 cents a share, from $17.2 million, or 26 cents, in the year-earlier period. Visx's net income matched the average estimate of analysts polled by First Call/Thomson Financial, though it was lower than some estimates of 40 cents to 41 cents posted on Web sites. Visx said in a conference call with analysts that it shipped 71 new lasers to U.S. customers in the quarter and 94 lasers worldwide, more than analysts had expected. The company said, though, that it didn't see the type of increase in operations in December from November that it had expected. The company said it believes some big vision-correction centers are performing as many operations as possible and have no room for growth. In addition, some U.S. customers seeking lower prices went to clinics in Canada. Visx doesn't charge a fee each time one of its lasers is used in Canada, where the company's patent protection isn't as strong as in the U.S., analysts said. Ratings Cut Several analysts cut their ratings on Visx today. Visx was lowered to ``market perform' from ``trading buy' by Goldman, Sachs analyst Lawrence Keusch, and to ``hold' from long-term ``buy' by William Blair analyst Benjamin Andrew. It was reduced to ``hold' from ``buy' by Warburg Dillon Read analyst Rebecca Irwin, and to ``buy' from ``strong buy' by SG Cowen's Dodds. ``The quarter was clearly disappointing based on our expectations,' Dodds said in a report with analyst Peter Bye. Visx said the average price for each procedure is dropping, which may spur more consumers to undergo the surgery. New clinics are opening and doctors are learning to use the devices, which analysts expect will help meet any increase in demand. Analysts said they expect the price of the procedure at some discount centers to drop to about $2,000 to $2,500 for both eyes. That would be about half of what some doctors have charged. Visx shares have lost more than half their value since the company said in early December that a U.S. International Trade Commission judge had ruled that the company's patents weren't infringed upon by competitor Nidek Co. Nidek's lasers don't require a card to be activated for laser-vision procedures, meaning that doctors don't have to pay a fee for each surgery. Visx said on the conference call that Nidek lasers were used in more procedures than Visx had expected in the fourth quarter. ¸2000 Bloomberg L.P. not very encouraging for the longs. regards