Blew out my remaining holdings on first reading of PR, thinking that when I figured out what it meant, could buy back.
Having done that, I will be shorting on any bounce. CMED pps will work its way down for some time to come. That press release is too deceptive. Start with the illusion that omplaint was inconsequently because it was anonomous. Whereas the complaint must have had solid foundation to justify the massive response.
Then to paper of a sales decline as being due to the distraction of a answering the complaint is a real stretch. Could management really be that poor. It certainly seems to be.
Looking for a bounce.
CMED has consistently screwed investors, from the converts, the sudden disposal of hifu and now this. Rather than consider this anonymous letter as some short tactic, I bet it was likely a true accusation of insider self-dealing. Calling in Paul Weiss is just to white wash it with a white shoe firm.
I still have some money invested, but I consider it lost, essentially. Barely worth it to sell it now.
" thier revenues are FALLING approx 15% quarter over quarter with no explanation as to why ".
We are looking at two different companies. Take a look below. And those numbers does not include SPR System, which is scheduled to be approved by Chinese FDA before the end of this year.
It depends on what factors accounted for the revenue drop. If it's mostly due to business not closing because of the distraction, then it's a short-term matter, and I'd expect the earning in 2010 to be fully back on track, and $16 would be seen as a great bargain considering their EPS should be above 2 easily.
However, if the distraction opened the door for new competition, and that is causing permanent loss of business and other longer term damage to the way it's operating in China, then it's definitely a bigger concern, and its growth rate could be coming down dramatically to warrant a single-digit PE.
To me, the price just look too attractive to not load up some at this level.