Last year, everything was clear in the world of Lake Forest-based Cooper Cos. after it finally completed a big acquisition and saw its stock price surge.
Now things are blurrier for the contact lens maker.
Investors began hammering Cooper’s shares late last year after the company lowered its outlook on soft sales of its contact lenses worn for two weeks at a time.
At the same time, Cooper said it was seeing foreign exchange issues and hurricane-related disruptions.
It also laid plans to buy two surgical device companies to bolster the other part of its business.
Then came January’s bomb: Cooper said it planned to restate results for the nine months through July of last year because of accounting related to its $1.2 billion buy of rival Ocular Sciences Inc., which closed in early 2005.
Cooper’s already beaten down shares took another pummeling. As of last week, Cooper counted a market value of $2.3 billion, off by a third since October.
Lawsuits Follow
Without losing a beat, the trial lawyers pounced.
Last month, Milberg Weiss Bershad & Schulman LLP, the former firm of San Diego-based class-action king William Lerach, sued Cooper.
A slew of other firms since have joined in.
The complaints are boilerplate: The company, Chief Executive A. Thomas Bender and two other officials misled shareholders about the Ocular buy, the lawsuits charge.
Cooper declined to comment for this story.
In a federal filing, Cooper said it erred in allocating its purchase price to customer relationships and manufacturing technology acquired in the Ocular buy.
Specifically, Cooper said it originally ascribed $30 million to intangible assets other than goodwill, but subsequently determined that it should have allocated $130 million.
Cooper said the correction resulted in the recognition of additional amortization expenses that affected its operating profits by $5.1 million in the nine-month period.
The company is due to report results on Tuesday for the quarter ended Jan. 31.
Analysts expect Cooper to earn $28.5 million, up 10% from a year earlier. Sales are seen coming in at $204.3 million, up 38%.
Cooper’s had other worries, including competition from Johnson & Johnson and Bausch & Lomb Inc.
Investors have feared a new type of silicon hydrogel contact lens could be cutting into Cooper’s sales, according to a recent story on SmartMoney.com.
Cooper plans its own version of the lenses in the middle of the year.
“Success in the coming fiscal year will be heavily dependent on Cooper’s ability to roll out a series of planned new products while adding incremental manufacturing capacity,” said Charles Olsziewski, an analyst with Oppenheimer & Co., in a December research note.
‘Significant Value’
Cooper’s core contact lens business still has “significant value,” Olsziewski said.
The company’s mainstay specialty lenses,for patients with astigmatism, dry eye and even for switching eye colors,are estimated to grow 16% yearly for the next several years, about double the forecast for the overall contact lens market, according to Olsziewski.
Ocular’s strength in Asia, particularly Japan, gave Cooper a big boost in a region where it previously did little business, Olsziewski said.
