darn

well the hits just keep on coming don't they? BLUD dropped somewhere around 20-25% yesterday because they decided to radically change the amount they were spending on R&D by way of an acquisition of a start up company (well they have been around for 10 years but they are a few years away from a fully automated solution so revenues are minimal).

Still thinking through this one -- the hard part is they claim the key to the deal is that no one else is focused on using DNA technologies on the blood bank market. I wonder about companies like ILMN and Gen-Probe. ILMN sells a bead express product that makes me wonder why someone couldn't come out with a blood bank version. Gen-probe sells nucleic acid tests (NAT) that are used for screening STDs and other types of products. Gen-probe has been a good stock but for me I haven't liked the valuation nor could I see as much upside as others given the returns so far.

BLUD's management has a great track record but 15% dilution for the next few years is hard to swallow. that's why the stock got crushed. They claim on the call that this DNA version of blood typing will be additive -- used only for tests that the current technology can't handle. I at first figured they are doing the deal because they believe their franchise is at risk and they have been spending only 2-3% of sales on R&D -- a pittance compared to most health care product companies. The only reason why DNA tech won't replace their current antigen tech is because of price -- something which is continually dropping so its more of a matter of time.

so in some ways despite the drop the story just became more risky -- or more precise the risks became more known -- DNA is something I wondered about prior to buying but decided to trust in management. have to do some more thinking and see what Wall Street's Finest have to say as well.

Oh and the Fed's actions? -- probably helps -- look at what their last auction did to the Libor rate -- I expect this action will help calm spreads within mortgage land to some extent but that doesn't change the fact that home prices are still falling and that there is still probably too much leverage in the system. Not much the Fed can do about the unwind of house prices and leverage but this move might make it orderly -- that might limit the collateral damage -- the innocent bystanders caught up in a liquidity squeeze of someone else's making.

Ken Fisher makes the point in Forbes that we don't have a credit crunch for anyone that has good credit -- true but I think he misses the point about house prices and leverage. still I would agree that the economic situation shouldn't be as dire as many think.

Took another look at the charts and realized the nat gas stocks look like Goog and apple from last year -- a wee bit extended. a better price is likely to come in the future. CLB is the one I should be focused on -- it had its goog moment last year too so its probably much closer to heading back up again then the nat gas stocks.