Tuesday, November 25, 2008

TomoTherapy Needs New Leadership

Last week Avalon Portfolio wrote a letter to the board of directors of TomoTherapy, criticizing them for the loss of stock value and squandering a "once enviable market position."

For the uninitiated, TomoTherapy is a Madison company that makes specialized cancer radiation treatment machines. It went public last year and saw its stock climb to more than $27 in July 2007. Today, the stock is hovering around $2 a share.

Avalon, which owns four percent of TOMO, suggests the company should sell, and I agree. TomoTherapy had the advantage of being one of the first on the market, but the management for some reason didn't strategize on how to deal with the inevitable competitors, who have sprouted up and taken over much of TomoTherapy's market share.

Avalon's other suggestion--starting a joint venture or licensing deal--also has merit but unfortunately is not in TomoTherapy's mindset. This can only be a result of ego and cockiness (and shortsightedness).

In a way, TomoTherapy reminds me of a worse version of Apple: innovative but didn't improve on or license its product when others came out with similar (and better) ones.

Read the news article.

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