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These Ivories Could Be Golden

Inside Wall Street


Pianos haven't been hot items in recent years, and the recession has exacerbated the slump in sales. But the nation's largest piano maker, Baldwin Piano & Organ, has survived the downswing quite well. Baldwin's 1990 earnings jumped 100%, despite fierce competition from Japanese and Korean producers, which together control 50% of the U. S. market.

Investors have been quick to notice: Baldwin's stock jumped 58%, to 9 1/2 from 6 on Feb. 20. Some big investors have continued to buy despite the rise. One reason: The piano business, they say, can only get better. So if Baldwin has done so well in the recession, it can only flourish when the economy picks up. But that's not all. Some pros see Baldwin as an alluring takeover target.

"With the industry near its bottom, Baldwin is a cheap buy for a producer of musical instruments, local or foreign," says one New York investment manager. Baldwin already has close ties with Japan's Yamaha, a big musical-instrument maker. Baldwin makes selected pianos for Yamaha, even though Yamaha sells its own piano brand worldwide. Should Baldwin's management, which owns a 55% stake, decide to sell, Yamaha could be a buyer, says this pro. Baldwin Chairman Richard Harrison owns 25% of the stock and President Harold Smith 23%.

"With or without a buyout, Baldwin is attractive," says Jean-Marie Eveillard, president of SoGen International Fund. As the economy recovers, he sees Baldwin earning $1.25 to $1.30 a share in 1991 and $1.75 to $2 in 1992, vs. 1990's $1.06. The stock, says Eveillard, could hit $20 a share next year.GENE G. MARCIAL

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