I find itis quite ironic that the very next quarter after they...

I find itis quite ironic that the very next quarter after they decided to return topreliminary reporting, they had to report sales miss. With investor call a monthaway, everyone has been left wondering what “slower than expected conversionrate of new accounts” means.

Should theychoose not to switch on preliminary reporting, this would have been reportedtogether with Q2 guidance and followed by an investor call to clarify any questions.

I guess thatthe reason for reinstating the preliminary reporting was their confidence in projections,where they could have benefited in bringing good news to the market earlier. Clearly no one expected that much volatility in sales since they had a few consecutive quarters of steady growth.

Looking atwhere to from here there are two scenarios on opposite ends of the spectrum.

On a positivepoint, this could be due to the running down of inventories in anticipation ofthe new GO device i.e. it is a deferred demand with sales bound to catch up inthe future quarters. It could also be a sign of confidence that FDA approval isimminent. Not sure why they didn’t say that in the announcement? Perhaps itcould be due to legal and not be able to talk about the device which is not yetapproved. However we didn’t see this dynamic in the lead up to the approval of thestreamlined device.

In thenegative, the only scenario where slower conversion could lead to a drop insales (vs prior quarter) was due to new accounts, not restocking inventories asfast as expected after the initial orders. i.e. they are not rushing to use thedevice. Despite the expanded FTSB opportunity being 10x of burns, under thisscenario we would be up for a very slow and painful growth and would not beanywhere near the full year guidance.

Unfortunately,we will have to wait until 14 May to understand the results in further detail, andwhich of the scenarios, or a combination of them, we will see.