| BUSINESSWEEK ONLINE : AUGUST 9, 1999 ISSUE | ||||||||
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| BUSINESSWEEK INVESTOR -- INSIDE WALL STREET
Waltzing with a Hefty Partner When Diametrics Medical (DMED) announced a deal on June 7 for Hewlett-Packard (HWP) to sell its blood-testing systems worldwide, Diametrics stock leaped from 6 to a high of 7 1/2. But it has since slumped, closing at 5 7/16 on July 27. Not to worry, say some big investors. ''A lot of folks just don't get it yet,'' says one money manager, referring to the deal with Hewlett-Packard, which on July 15 acquired 5% of Diametrics stock, with an option to buy as much as 19.9% on the open market within 18 months. ''I would be surprised if Hewlett-Packard didn't end up acquiring Diametrics,'' says Jim Tilton, managing director at Trust Co. of the West, a California investment firm that manages some $50 billion and owns some 5% of the stock. He believes Diametrics is important to Hewlett-Packard's game plan in the medical diagnostic-monitoring market, of which it controls 45%. HP plans to spin off its $7.8 billion medical products unit in the fall. Speculation is that the HP medical unit will spur growth by tapping into the $2 billion point-of-care diagnostic market. Diametrics' IRMA blood-testing system allows health-care providers to evaluate a patient's blood-gas chemistry at the bedside. And its Paratrend and Neotrend systems allow continuous monitoring of blood gas. Diametrics also has alliances with Johnson & Johnson, which also owns 5%, and GE Marquette Medical Systems. Tilton figures that, with the HP pact, Diametrics sales could jump from $12 million in 1998 to $20 million in 2000 and to $100 million in 2001. Analyst Justin Vaicek of Cruttenden Roth expects Diametrics will be in the black by 2001. BY GENE G. MARCIAL _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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