Seeing The Future.

Bob Palmisano had been at contact-lens giant Bausch & Lomb for 13 years when he had a vision of where the sight-correction business would be heading--and it didn't involve putting tiny pieces of plastic daily into the eyes. As president of the eyewear division, Palmisano, 55, watched eagerly as B&L researched the laser vision-correction industry, but the company ultimately decided to pass (it has since entered the market).

So, when Waltham, MA-based Summit Technology (now Summit Autonomous) needed a CEO in 1997, he was quick to jump. At the time, Summit (NASDAQ: BEAM) was one of only two companies that had received F.D.A. approval to use their excimer laser technology to reshape the cornea. Along with competitor Visx, Summit's LASIK procedure (short for laser-assisted in situ keratomileusis) had been helping Americans throw away their glasses for only two years, but the buzz on its benefits was getting louder--and with 160 million U.S. wearers of contacts or glasses, the potential market was huge.

Since then, Palmisano's faith in the technology is proving well-placed. Featured in such media as Time and Fortune and touted by celebrities Troy Aikman and Wade Boggs, the eyesight-assisting surgery doubled to nearly a million procedures last year over a year earlier--with projections to reach 1.3 million this year. Summit's revenue jumped 21 percent in 1999, to $111 million, and its stock soared 167 percent.

And the positive performance was not lost on other innovators in the marketplace. At press time, Summit announced it was being acquired by Nestle SA subsidiary Alcon, a Fort Worth, TX-based company involved in R&D, manufacture and marketing of ophthalmic products, including surgical instruments and accessory products. According to Alcon's president and CEO Tim Sear, Summit is "the clear technological leader in the refractive field," which made it attractive to a company looking to be a player in the lucrative refractive surgical market.

Still, even with its accomplishments in refractive technology, Summit had a long way to go when Palmisano took over--and still does. "When I came to Summit, I had no idea what I was getting into," Palmisano admits. For starters, the company was embroiled in numerous lawsuits, from patent fights with competitors to shareholder battles with disgruntled stock owners, and even to an investigation by Congress of how a competitors' F.D.A. submissions wound up at its firm. The $7 million Summit was spending annually in litigation fees "was practically the largest line item on our budget," Palmisano jokes--his laughter tinged with pain.

Moreover, much of the company's management team had left in the months prior to Palmisano's arrival. The company was also reeling from its strategic decision to open a chain of 20 laser vision centers, Refractive Centers International--thereby going into competition with the very doctors it was courting as customers. And while it had been the first company to get F.D.A. approval, it was only for mild myopia (nearsightedness). Summit had sought no additional conditions, while rival Visx garnered F.D.A. nods for astigmatism, high myopia, and more.

Analysts agree that Palmisano--whose 20/20 eyesight obviates his own need for the surgery--has done admirably getting the company back on track. He ended much of the litigation, hired numerous seasoned executives, sold Refractive Centers, established a team focused on building relationships with physician-customers (90 percent of whom now say they would recommend Summit, up from a paltry 51 percent in 1997), and aggressively acquired F.D.A. approvals for a wide range of additional conditions.

Still, challenges remain, even if the acquisition by Alcon goes through. For one, the growing popularity of LASIK hasn't been lost on competitors, three more of whom have since entered the market. "I used to say we didn't have customers, we had hostages. Now people have someplace else to go if we don't satisfy them," Palmisano observes. The most formidable new entrant is, ironically, Bausch & Lomb. "Bausch & Lomb is going to be a serious competitor, making market-share inroads," says David Gruber, M.D., an analyst at Lehman Brothers.

For now, Visx remains the wide market leader (Summit has roughly 20 percent market share, Visx most of the rest, analysts say), but Summit is gaining. However, the company had to adjust its revenue expectations when in February Visx cut its fees. Unlike most other devices, excimer lasers are sold to doctors (at roughly $500,000 per machine) with a per-procedure licensing fee. That fee had been $250, but Visx, facing competitive pressure from the new entrants, dropped it to $100, forcing Summit to follow. The drop battered Summit's stock, which now sits at $9, down from its recent average of $16.

Palmisano remains rosy-eyed about Summit's potential. "We're in very good shape as we move forward," he says. Agrees Kate Sharadin, senior research analyst at Preferred Capital Markets, "I'm optimistic about their prospects." Most notable to Sharadin is Summit's purchase last year of a company that has developed a next-generation laser, Autonomous Technologies Corp. Autonomous' narrow beam laser with scanning technology eliminates one drawback of LASIK surgery, nighttime glare.

"It was important that Summit move into this new tech Sharadin says. "Eventually, we see this as being the dominant technology in the market," Palmisano says, noting that the new, premium machines (27 of which were sold last quarter) will allow Summit to again command top per-procedure fees.

In the works are more technological enhancements to improve outcomes beyond 20/20, and even do customized treatments to fix all the irregularities a scanner detects in a patient's eyes. That way LASIK recipients will see as clearly as Palmisano has about the potential of this booming industry.

BOB PALMISANO

Chief Executive

Summit Autonomous

"I used to say we didn't have customers; we had hostages."

Birthplace: Jersey City; NJ

Age: 55

Education: B.A., Providence College, 1966

Type of car: BMW 

Family: Wife, Jane; sons, Chris, 33, Eric, 30, and Matt, 27

Leisure interests: Boating, race car driving, and golf

Favorite book: War & Peace

Favorite movie: Annie Hall

Major influences: Family and Providence College