agreed to settle a four-year-old patent infringement suit brought by
( PMTI) over technology used in laser-based hair removal systems.
Shares of Cutera soared on the settlement as Wall Street welcomed any outcome that didn't forbid it from selling the equipment in question. In premarket trading, the stock jumped $6.86, or 36.5%, to $25.64.
Cutera will pay Palomar $22 million to cover past royalties and legal fees, and pay Palomar a 7.5% royalty on the future sale of systems using the technology. The company will expense the payment in its second quarter, and said it now expects a loss of $12.8 million, or 89 cents a share, in the period, which ends June 30.
Excluding items, Cutera expects to earn $1.2 million, or 8 cents a share, on sales of $23 million in the second quarter. Analysts surveyed by Thomson First Call were forecasting earnings of 12 cents a share on sales of $23 million.
For the year, the company expects to earn 82 cents a share before items on sales of $68.8 million. Analysts were forecasting earnings of 94 cents a share on sales of $98.6 million.
"We have been engaged in this litigation since February 2002, and are pleased to get the cost and related distraction behind us," Cutera said. "Both the uncertainty associated with a jury trial, and the costly, protracted schedule of a second lawsuit and possible appeals have helped us determine that global resolution of these matters is the best solution."
Palomar said: "Cutera has admitted to the infringement, validity and enforceability of the Anderson Patents and agreed not to challenge them in the future."