Cutera (CUTR) manufactures laser and light-based aesthetic applications. Little good news has been coming out from any of the industry players and Douglas Cress thinks the industry may be in for a round of consolidation. In this difficult macroeconomic environment, it looks like people are cutting back on luxuries like liposuction and eye lifts. From Cutera's FQ308 conference call:
Customers that once generated a significant part of our business appear to be more impacted by a challenging economic environment.
Most [in the 80% range] of our sales are financed. Most of who we sell to are physicians who are still very credit worthy. We are finding more of the issues as being primarily here in the US where they are deferring the decision to purchase and are not as much related to lack of credit.
The greatest success stories seem to be with existing aesthetic practices. They are continuing to buy equipment and they have successful practices where they have been able to successfully market these procedures and as new applications are launched they tend to continue to be interested to add those things to their practice.
During the quarter, we have recorded a non cash impairment charge of $2.4 million or $0.19 per diluted share for the write down of our investment and auction rate security… As a reminder, we have $13.4 million par value invested in various auction rate securities… If valuation of these securities further deteriorates, we will be required to record additional impairment charges into each quarter.