There's a saying among lawyers that when the law is against you, argue the facts, and when the facts are against you, argue the law. Aesthetic-laser maker Candela
Management maintained that the laser maker's business should grow 20% annually, and pointed out that Candela's revenues grew 21% for 2006. The company said that gross margins should be in the range of 50% to 53%; they came in at 49.4% this year. Operating margins should be 14% to 16%, and they were 15.4% for the year. Cash in the bank, days sales outstanding, and inventory turns all improved year over year. Moreover, beginning in January, Candela will be introducing some new products -- what it tentatively referred to as the 3630, for the 36 configurations and 30 applications it will encompass in a single "footprint" -- which would be followed by more multi-configuration, multi-application products in the future. In short, the business was running as expected, and the future was looking bright.
Apparently, there was no need to dwell on, let alone mention, the dismal fourth-quarter results. Otherwise, management would have had to mention that while revenue grew to $41.3 million from last year's $38.6 million, earnings fell more than 25% to $2.4 million, or $0.10 per share. Analysts had been expecting revenues of $47 million and earnings of $0.23 per share, a miss that management obviously wouldn't want to highlight. That's a different tack than the company used when discussing its robust second-quarter numbers earlier this year.
Candela also apparently didn't want to discuss its legal wrangling with Palomar Medical Technologies
Funny, but when I spoke with Palomar, management indicated it had been sending individualized letters to Candela since 1999. They were indeed similar to the letters sent to Cutera
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