One thing should be made clear. Syneron Medical Ltd. (Nasdaq: ELOS), Lumenis (OTCBB:LUME) and many other companies are players in a very hot market as far as Wall Street, and definitely Main Street are concerned. Lumenis is still the world leader in laser-based treatments.
Syneron, which has just recovered from a mini crisis has two key advantages. One is that its chairman Dr. Shimon Eckhouse, knows the market better than anyone; he is, in effect, the one who invented it. The second is that Syneron has learned from all the mistakes made by Lumenis. According to the consensus, the company’s earnings per share will be $2 in 2006, rising to $2.4 in 2007. At a price of $30 a share it is still a very good investment economically. The company received approval for a device focusing on an extremely hot area. Its Velasmooth laser-based system removes (temporarily, one should add) cellulite in the thighs and is meant for use primarily by women. Velasmooth was also recently approved as treatment for local pain relief and improving blood circulation in the knees.
Is there any connection between Syneron and the continuing declining fortunes of Lumenis? You bet there is and don’t believe anyone who says otherwise. The problem with Lumenis, as highlighted more and more when considered against the progress of Syneron, is its inability to lift its sales high enough to make the breakthrough. Bank Hapoalim (LSE: BKHD; TASE: POLI) not Lumenis, should have been the one to broach the idea of a merger between the two, but with all the money it has been making in recent years, the big bank apparently has overlooked the fact that Lumenis’ debt to it has long since passed the NIS billion mark. It seems to me, that the only investors still buying the stock are scavengers, those who believe the company is already history and are buying in the hope that the bank or management will do something to stop the rot, either sell disband, merge, anything.
A classic case of investors gone mad is that of Alvarion (Nasdaq: ALVR; TASE: ALVR). Alvarion is associated, for better or worse, with WiMAX technology. A year ago, we were sure that Alvarion was nothing less than the next M-Systems Flash Disk Pioneers (Nasdaq: FLSH). The analysts were convinced that the WiMAX was going to be a hit and unfortunately, it didn’t happen. Could it still be a hit in the future? I noticed that the Canadian site, "The Bellwether Report" announced at the weekend that it had chosen the “four most promising stocks on Nasdaq,” Alavarion and three others, Works Inc, Streicher Mobile Fueling Inc and Beacon Power (NasdaqSC:BCON). When I asked "The Bellwether Report" why they included Alvarion, they said it was because WiMAX was a hit.
What has changed this time round? It appears that during the Passover holiday, a province in the state of Michigan named Muskegon County on the shores of Lake Michigan contracted with a company named Arialink Broadband to network the entire area with a WiMAX grid. “This is one of the most significant developments in WiMAX installation to date,” wrote "Unstrung" senior editor Richard Martin. The entire infrastructure will be provided by Samsung, which will use its e802.16 technology. “Samsung,” writes Martin, “is committed to WiMAX and believes it is the future.”
Have you ever heard of Samsung getting it wrong? Perhaps it did in the case of M-Systems. Either way, I have no idea if the news from Muskegon county is the landmark event heralding the dawn of a new era, but everywhere I go, I keep hearing that “2007 will be the year of WiMAX.”
Published by Globes [online], Israel business news - www.globes.co.il - on April 20, 2006
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