I am new to this stock - I love crazy selloffs, especially when the news isn't really clear. Should this stock lose 35% of its value because of a possible loss in a court case that involves some of its products? I guess so if there is a very good chance that they would lose. But, how often is there a guilty verdict in a patent infringement case?
Anyway, the trial is a ways off. So, in the meantime, I am betting on a modest stock price bounce back tomorrow. I bought 204 shares after hours at $27.74, and, since that is 51 cents below the 4:00 pm closing price, I don't think I am risking too much. What do you guys say?
I agree with you that the street knows who will win the suit. But it is also a known fact that street has a short memory. Even if CUTR loose this suit, it will take quite a long time to get the verdict. Remember ! the damn lwayers are involved here. They will try to go in apeal after apeal and extend the case -so that they can milk as much money as possible. Meanwhile CUTR will come up with some mind blowing results in 2006. As a street player lets milk this cow. We will have enough time to get out before the final verdict is reached. In 2006 after the results some idiot ANAL**st is going to upgrade this stock for sure. At that time it is best to abandon this sinking ship. Good luck and happy hunting. (You guys have Christmas holidays in US coming up. Marry chrismas in advance. Here in my country (India) we get only 1 day off.)
The 35% selloff is a huge overreaction. However, the momentum is clearly southbound. If you are patient you will double you money in 2006. I think Cutera wins this case in January. Even if they lose....appeal time!
i agree with your analysis and i am planning to wait until 12-1 pm tomarrow to buy a good chunk of the stock. i do not own this stock but have been watching it for a while.by the way, i love it when the market panics. this is how i make most of my living.
The party that will most likely win will make such a motion (motion for summary judgment or directed verdict). Here CUTR is very confident that it will win the lawsuit and that there is nothing substantive in Palomar's lawsuit. This is why CUTR filed the motion. Even frivolous lawsuits survive the motion as long as plaintiff argues that there is something that must be determined at trial. It can be 99.999% in favor of CUTR to win the lawsuit but that other 0.001% chance allows the lawsuit to continue to trial.
This news (yesterday) is no news. However it succeeded to create a great opportunity to buy.
You forget that Palomar already has a record of winning similar lawsuit against Lucent. Also, anyone who looks at the amounts pmti and cutr spend on research will disposed to guess a similar outcome. The chances are more like 50/50 at best for cutr. How large the damage will be is another question, this is hard to say.
Look, LSCP and LUME are already paying royalty to PMTI. What's CUTR's chance of get away from it? Plus, if CUTR indeed willfully infringed PMTI's patents, penalty can run as hi as 3 times normal due! That's the danger of owning CUTR at this juncture, and that was the reason that 2 firms downgraded CUTR today. PMTI said they will NOT even license to CUTR, which means if CUTR loses, they got to shut their dorr. And that is the risk of owning CUTR!
There is only 1 winner in this: PMTI. A better way to play this is just to load up PMTI