Inside Wall Street
SEQUOIA: TOWERING ABOVE THE TECHIES
High-tech stocks, big as well as small, have been sorry losers in recent months as investors have turned their attention -- and their bucks -- toward the biotechs. But don't count them all out. One techie that has been quite hot -- and has withstood the group's pullback -- is Sequoia Systems, a designer and maker of high-performance multiprocessor computers for on-line processing and other interactive operations. Sequoia's stock, at 11 in July, has climbed to 17.
One reason for Sequoia's strength is its impressive gains in fiscal 1991, ended on June 30. Profits for the year jumped 58% on a 30% sales increase. And in fiscal 1992's first quarter, earnings leaped 37% on an additional 30% gain in sales. Casey Stern, an analyst at Starr Securities, sees Sequoia's earnings of 78~ a share for 1991 continuing to strengthen, to $1.10 in fiscal 1992 and $ 1.50 in fiscal 1993.
And that's not all. Sequoia has lined up strategic alliances with several big companies, including Hewlett-Packard, which owns a 9% stake in Sequoia, as well as with Toshiba and Sumitomo Electric Industries. The Japanese alliances alone "will generate incremental revenues of at least $25 million over the next three years," says Stern. Toshiba and Sumitomo will provide money and manpower to develop Sequoia's "fault-tolerant" computer technology, which allows for programming errors.
Sequoia's systems are used in weather analysis, telephone switching, call-forwarding, and missile tracking. The technology will be marketed in Japan by Toshiba and Sumitomo.
Stern, who expects Toshiba and Sumitomo to eventually buy equity stakes in Sequoia, is forecasting that its shares will double in 12 months. GENE G. MARCIAL