Lumisys looks for key to unlock dot.com value

Internet systems company Lumysis is trying to find out just how much value an online radiology information site it launched last year has added to the Sunnyvale, CA-based company’s overall worth.

Lumysis provides companies with products that translate analog information into electronic information, including x-ray film digitizers and hardware and software for OEMs. Products include the ACR-2000 and ACR-2000I Desktop CRTM computed radiography systems and the Luminator and Lumiscan family of x-ray digitizers.

Last year, Lumysis launched AuntMinnie.com at the RSNA’s annual convention. The Web site contains clinical and business news for radiologists and equipment vendors, in addition to an online catalog and book marketplace, classifieds, and convention schedules.

The site’s variety and number of registered users should make Lumysis more valuable, said Dr. Phillip Berman, CEO. Lumisys has hired the firm of Warburg Dillon Read to investigate this hypothesis and possibly create strategies that will make the company’s value more attractive to shareholders. (Lumisys’ stock was selling for $2.50 per share when SCAN went to press.)

“We think it adds up to more than what the stock is trading for. It’s simple math,” Berman said. “The purpose is to get that value into the stock.”

Radiology analyst Robert Bell said an online business like AuntMinnie.com has to show its ability to raise revenue before a parent company like Lumisys can claim it as a cash cow.

“Lumisys can’t take a naïve approach and say, ‘We’ve got a dot-com company, (therefore) we are worth more,’” Bell said.

In addition, there are other radiology Web sites that are competing for AuntMinnie.com’s audience, Bell said.

In the first quarter of 2000, AuntMinnie.com took in $90,000 in revenue and incurred $1 million in operating expenses for a loss from operations of $896,000, according to the company’s first quarter results.

Advertising makes up a small percentage of the company’s revenue, said Karen Klause, AuntMinnie.com’s president. Most of the revenue comes from marketplace transactions and contracts with members of the medical community.

For example, Klause said, AuntMinnie.com has signed an exclusive agreement with Massachusetts General Physicians Organization that guarantees AuntMinnie.com exclusive rights to publish any of the organization’s writings, teachings, and CME material. Soon, the company will add more equipment and accessories to AuntMinnie.com’s four-month-old online catalog, Klause said.

Berman declined to disclose what he thinks Aunt Minnie.com was worth.

“I don’t want to venture an estimate. (Estimates) are obviously subject to market conditions,” he said.

Asked if tech stocks’ dismal performance on Wall Street last week concerned him at all, Berman said erratic activity may change how the value of tech stocks is pegged in the overall marketplace, but he doesn’t think it affects AuntMinnie.com’s value to the company.

The company has cash and equivalents of $15.4 million, assets of $24 million, and little debt, said Dean MacIntosh, Lumisys’ chief financial officer.

In the first quarter of 2000, Lumysis’ revenue increased 18% over revenue from the fourth quarter of 1999. Its first quarter 2000 revenue decreased 13% from the first quarter of 1999, however, to $5.1 million from $5.9 million.

In addition, Lumisys’ 1999 fourth quarter revenue decreased 17% to $4.4 million from its 1998 fourth quarter revenue of $5.2 million. The decline came in part from lower-than-expected digitizer and ACR-2000 sales, according to the company’s fourth quarter and year-end results report. Total revenue for 1999 was $19,167,000 compared to $19,163,000 in 1998.