Unlike the meteoric rise of certain stocks after initial public offerings, one high-tech stock has headed south in a frightening way: Cerion Technologies (CEON) plunged from 18 in late May to 2 3/8 on Oct. 29. Cerion makes thin-film disks for small, high-capacity, high-speed disk drives used in minicomputers, desktop computers, and workstations.

What happened? Cerion, which posted sales of $512 million last year and earned $106 million, or $2.14 a share, lost its second-largest customer--StorMedia, a maker of 2 1/2-in. and 3 1/2-in. thin-film disks for hard-disk drives. The customer canceled all outstanding orders because of its own problems. StorMedia accounted for about 34% of Cerion's second-quarter sales.

Analyst William Bartels of William Blair, the firm that took Cerion public in May at 13 a share, cut his 1996 earnings estimate from $1.33 a share to $1. But after Cerion reported a third-quarter loss of 7 cents a share, he figures it could earn only 30 cents for all of 1996. He rates the stock a long-term buy, however, saying "it's still a real business with good assets."

Not everybody joined the rush to bail out. Bill Hopke of Trilon Dominion Partners, which has nearly a 5% stake, held on. Why? He thinks Cerion will replace the lost customer. And he suspects other customers, including IBM and a large computer maker in Taiwan, may be tempted to acquire Cerion, mainly because of the drop in the company's market capitalization from $150 million to just $22 million.

For a company that has $14 million in cash, or $2 a share, and a decent business, with no debt, "the stock is uncommonly cheap," says Hopke. Moreover, StorMedia in recent weeks has resumed buying from Cerion.

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