Big Bidders May Be Tuning In To M/A Com

Among the scores of high-flying technology stocks that investors have become disenchanted with is M/A COM Inc. After posting disappointing first-quarter earnings, M/A COM, trading at around 10 in January, skidded to 5 by late April. But lately, the maker of military and commercial telecommunications gear has picked up speed on rising volume, closing at 77/8 on June 28. Some heavy hitters think something is afoot and have accumulated shares.

These pros are betting that M/A COM has become buyout bait. One Boston hedge-fund manager, who has been buying in, says three major contenders are considering separate bids for M/A COM. One of them, he says, is a large telecommunications company. Another is a maker of missiles, radar equipment, and commercial aircraft. And the third is a big player in cellular telephones.

What attracts these companies to M/A COM, says this pro, is its technology in radio-frequency wireless communications, which the military has used in various ways. M/A COM has the capacity to apply the technology to nonmilitary uses, such as cellular telephones and warning sensors to help prevent collisions in cars of the future.

CHANGING INTO CIVVIES. Charles Kap-lan, an analyst at Herzog, Heine, Geduld, a New York securities and investment firm, agrees that M/A COM has become an attractive takeover candidate. "Its hidden value lies in its gallium arsenide radio-frequency technology that is vital to wireless communications," says Iaplan. M/A COM has whittled down its defense business to about 37% of total revenues. On the other hand, the commercial side of its business has increased to 47%. The remaining 16% comes from nonmilitary government business.

Kaplan figures M/A COM is worth $14 a share in a takeover deal. He believes the company's earnings will expand as its commercial operations increase and military orders stabilize. He estimates M/A COM will earn 80 cents a share in 1996, up sharply from an estimated 45 cents in 1995 and 35 cents this year. The company earned 26 cents last year. Most analysts, notes Kaplan, have become impatient with M/A COM because of the long delay in its promised turnaround. One big investor, however, says: "A buyout could come before the turnaround."

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