Inside Wall Street
WILL MURDOCH HOME IN ON HOWTEK?
What a difference a year makes. Last November, Howtek seemed a lost cause. Its stock had spiraled down to 2 1/2 from 27 in 1987. But new life has come back to this designer and maker of desktop color scanners. The stock has climbed to 16 and looks poised to move even higher.
Some smart-money investors have been snapping up Howtek's shares partly because the company's new products, widely used by newspapers, magazines, and commercial printers, have started to catch fire. In the red since 1985, Howtek is now making money. But once again, some pros are eyeing publishing mogul Rupert Murdoch, News Corp.'s chairman and CEO, who controls a 22% stake in Howtek, matching the 22% holding of Howtek Chairman and CEO Bob Howard.
IN LIVING COLOR. Whispers are that Murdoch wanted to acquire the company four years ago when he started accumulating shares but that Howard persuaded him to hold off. Murdoch can raise his stake up to 25% under the terms of a standstill agreement, but now Howard may agree to let Murdoch raise his holdings beyond the limit, according to one New York money manager. Howard, who has a friendly relationship with Murdoch, says he wouldn't object if Murdoch were to ask for a seat on Howtek's board. Howard says Murdoch likes Howtek because of its color-scanning technology, which he sees as a big advantage in publishing.
Howard is the inventor of the matrix impact printer and founder of Centronics Data Computer, whose stock zoomed from 7 a share to 450, unadjusted for several splits, from 1970 to 1980, when Control Data acquired it.
Kemp Fuller, an investment strategist at RAS Securities, expects Howtek to earn 47 cents a share this year, $1.50 next year, and $2.30 in 1994, untaxed, because the company had an operating- loss carryforward at the end of 1991 of $33.2 million. He bases his estimates on a projected jump in the sales of Howtek's Scanmaster D4000, introduced late last year. The D4000 scans, or digitally photographs, reflective or transparent images at resolutions from 50 to 4,000 dots-per-inch.
This product "is a high-resolution scanner targeted toward publishers, color separators, and commercial printers in the mid-range electronic prepress market," says Howard, who believes D4000 will be a "blockbuster" product. Fuller notes that the new product retails for $39,700 a unit vs. competing products selling at more than twice that price. He adds that by gaining share in both the high and low end of the market, Howtek will be the industry's major player before long.GENE G. MARCIAL