<<Ted, I sure would like to know what your interest in ripping PMTI is. For at least the past year you've had many posts, obviously time consuming, and always negative.>>
As I have stated many times, my interest is as a consumer. I have researched laser hair removal in considerable depth, and concluded that it offers poor efficacy for the cost of treatment. Also, false and misleading promotion has been a serious problem within the industry. I have shared my findings with investors, because I found that most seem not have to have researched laser hair removal at all - they simply bought the industry's hype without much question. My posts are negative because my findings are negative.
<<Surely you don't like this stock as a short at this price.>>
I do not provide investment advice - only information and commentary.
<<Were you ever long?>>
I have never been long or short any of the laser hair removal stocks, nor any of their competitors.
<<Also, you're very mistaken about the MEHL lawsuit. You say that winning this will not affect their sales. You forget that MEHL used illegal scare tactics against prospective and current customers, threatening to sue PMTI customers if they used the product.>>
MEHL may well have tried that tactic, but it did not prevent PMTI from selling a couple hundred Epilasers. The real issue for investors is that PMTI lost money on each Epilaser. That had ZERO to do with MEHL or PMTI's non-core busineses, and everything to do with very poor efficiency in all aspects of their medical business. Review message 572, and you will find that I provided PMTI's investors with excellent data that showed just how rotten PMTI's medical business was (and still is). Those who focused only on shedding the non-core businesses, missed the essential point - ALL of PMTI's businesses were huge money losers!
Compare PMTI's medical GP, R&D, S,G&A and S&M as a percentage of sales, against huge Coherent, or tiny Candela, and you find that PMTI is way out of line - not even close!
<<Now that PMTI can show that MEHL is out of the game, it could have a very big effect.>>
I highly doubt it, but time will tell.
<<Maybe that's why you're always writing against PMTI - you hold stock in MEHL which has now been de-listed from NASDAQ and may go bankrupt. Or is it another competitor?>>
Dream on! You have access to the AOL investor forum, so look at the MEHL board during last fall and right up to Christmas, and you will find that I provided MEHL investors the same in-depth analysis that I provided PMTI and TLZ investors. Most of them rejected my warnings, and now they are facing delisting in one week. I have zero sympathy for people who refuse to face reality.
<<PMTI's biggest mistakes were 1) thinking they'd get FDA approval faster than they did,>>
Only an idiot would have believed that FDA would have cleared the Epilaser based on Rox Anderson's 13 subject pilot study, which is what PMTI submitted in its first 510(k), filed on 8 Dec 95. That was in no way a clinical trial! Those who did their homework, knew what to expect. Check the posts by HardData on AOL, during June 1996 - he predicted that PMTI would fail to get FDA clearance for hair removal based on the 510(k) submitted in Dec'95. He was ridiculed, but one month month later he was proven correct.
<<2) stretching their R & D dollars too thin - investing in many development stage companies that may be profitable some day, but which ate up funds, requiring that constant additional funds be raised.>>
A detailed reading of the SEC filings reveals that in both 1996 and 1997, medical R&D accounted for about 80 percent of the total R&D budget. There is no doubt that the non-medical businesses ate up a lot of funds, but that is due to their overall losses, of which their R&D was a minor component. But that ignores the real issue: the poor efficiency with which PMTI spends R&D dollars.
Compare PMTI's 1997 medical R&D with Candela's. PMTI spent $11,921,000, or 57 percent of laser revenue. Candela spent $2,680,000, or 8 percent of laser revenue. During 1995-97, PMTI spent about $21.8 million on medical R&D, while Candela spent $6.2 million; however, during the same period, PMTI received only 6 FDA 510(k) clearances to market, while Candela had 11. By any measure, Candela achieves far more per R&D dollar than PMTI.
(By the way, in case you think I am promoting Candela, there is ZERO chance that I will ever invest in it. I watch it for the same reason I watch PMTI, TLZ, MEHL, and ESCMF - because it is coming out with a laser hair removal product. By the way, Candela's GentleLase seems to have run into trouble getting FDA clearance for hair removal, which may help COHR/PMTI in the short term - but only if PMTI can profit from the sales, which I highly doubt.
<<They've divested themselves of most of these and have good potential for profit. How much is a valid question, but I feel very safe in concluding they will be profitable soon.>>
Do you have any numbers to back this up? My numbers indicate that it is a huge long-shot to make even a small profit in Q4.
<<PMTI's stock slump started with MEHL's suit right after they finally got FDA approval.>>
True, MEHL's suit stopped PMTI's share price dead in its tracks, but the disastrous F96Q4 earnings released one week later, is what started the slide, which worsened with each subsequent earnings report in 1997.
Ted Molczan
molczan@sympatico.ca
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