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VISX shares slump 25%
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February 23, 2000: 2:59 p.m. ET
Investors frown on plan to slash fee laser technology maker charges doctors
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NEW YORK (CNNfn) - Shares of VISX Inc., a maker of laser technology to correct vision, fell more than 25 percent on Wednesday, after Wall Street analysts frowned on the company's plan to stay competitive by slashing prices.
The stock fell 5-3/16 to 16-11/16 on Wednesday afternoon, and hit a low of 16 earlier in the session. VISX shares have been pummeled in recent months, falling from around 103 in August and 50 last month, as the company struggled with slower-than-expected revenue growth and price competition.
After Tuesday's closing bell, Santa Clara, Calif.-based VISX (VISX: Research, Estimates) unveiled its plan to cut the license fee it charges its customers to $100 from $250, in an effort to give customers increased marketing resources and accelerate the growth of laser vision correction in the United States.
The company admitted that, despite rapid acceptance since FDA approval in late 1995, the market for laser vision correction remains small compared with the market for spectacles and contact lenses.
Reacting to the development, Lehman Brothers cut its rating on VISX shares to neutral from buy. Other Wall Street analysts were similarly unimpressed with the plan.
"We suggest that this move by VISX would further exacerbate the negative sentiment surrounding the company on both ophthalmic and investor fronts," said Kate Sharadin, senior analyst at Preferred Capital Markets.
"We believe that this move by VISX would not translate into increased market share, nor would it change the negative sentiment of VISX in ophthalmic circles, especially amongst the company's largest customers," she added. Preferred rates the stock at hold.
VISX, which claims that more laser vision-correction procedures have been
performed in the U.S. using its VISX STAR system than all other laser systems combined, also announced plans to buy back up to 10 million of its 64 million outstanding shares. 
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