Syneron Medical's Bipolar Growth

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Are Americans becoming less vain than the rest of the world? A quick look at Syneron Medical's (Nasdaq: ELOS) bipolar growth would make you think so. Unfortunately, it's probably not so much that we don't want to look good as that we don't have the free cash right now to spend on discretionary items like fixing blemishes and cellulite. 

Syneron's international sales rose 17% year over year, while U.S. sales sank more than 9%. International sales have now caught up to U.S. sales, thanks in large part to the fact that in other countries, the market for its devices extends beyond doctors to other "aesthetic professionals." I'm sure currency changes also helped boost the international sales, but management didn't break it out for investors. Shame, shame.

To spur growth in the U.S. market -- and maybe take some market share away from fellow laser makers Palomar Medical (Nasdaq: PMTI), Cutera (Nasdaq: CUTR), and Cynosure (Nasdaq: CYNO) -- Syneron has begun leasing out its new cellulite reduction machine. That should help some doctors who don't want to shell out almost $100,000 for a machine that, they probably figure, won't get used very much until the recession is over. Syneron calls the lease a subscription, but it's pretty much an interest-free loan, because any fees the doctors pay are credited toward purchasing the machine.

The laser maker is diversifying its revenue stream across different continents, but it's also trying to get products at different price points to capture the entire market. It's hoping that its partnership with Procter & Gamble (NYSE: PG) will produce a home-based skin-rejuvenation device in the second half of next year. Just in time for the economy to start heating back up?

Syneron's bottom line isn't perfect. Higher costs resulted in a 15% decrease in operating income. The only thing that saved the company from a year-over-year decrease in the bottom line was a one-time $2 million tax credit. That being said, in this market environment, treading water is probably good enough. When the U.S. economy turns around, Syneron should be poised to take advantage of Americans' desire to look good.