Originally Published MX May/June 2002
COVER STORY
Dollars over Time
Keeping technology-based
companies in the black can be trying for company executives. While unruly investors
exert pressure for ever-greater return on investment, the dangers of R&D
or production delays are always lurking to trip up the unwary executive who
overpromises on company performance.
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Abiomed
stock price for 12 trailing months ending April 2002. Source: NASDAQ.
(click to enlarge)
Over its 21-year history, Abiomed has managed to keep nearly all of these bears
at bay, while still making progress toward its goal of developing an artificial
replacement heart. Doing so has involved a careful balancing act between government
research funding, equity investment, and product sales revenues.
Last year, as the company prepared to embark on clinical trials for its AbioCor
artificial heart, investor optimism pushed the company's stock price to
a high of $28—the best share price since October 2000, when the company's
stock momentarily hit $36.
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Since last year,
however, stockholders seem to have gradually lost focus on the company's
prospects, putting share prices into a gradual decline. In April of this year,
the company's share price tumbled below $8.
With investor sensitivities running on heightened alert, however, company value
could rebound on a single optimistic piece of news. The trick will be to keep
bad news from having the opposite effect.
