Symbol Looks Vulnerable
Symbol Technologies (SBL ) is giving off bad vibes: In six months the shares have slumped from 19 to 11. U.S. and European sales are weak for its laser-scan engines, bar-code readers, mobile computing, and radio-frequency ID (RFID) technology. In three weeks, Symbol twice cut its second-quarter forecast. And the July 14 resignation of CFO Mark Greenquist added to worries. But David Katz of Matrix Asset Advisors has snapped up 5.2 million shares for clients. He believes Symbol may be bought out. "The depressed stock makes it vulnerable to a takeover," says Katz. "It makes enormous sense" for a big wireless and mobile computing outfit to own Symbol. He figures Symbol is worth 19. CEO Bill Nuti turned Symbol around after a tumble two years ago under previous management. (It was featured in this space on Aug. 26, 2003, at 9.10.) But Symbol has failed to beef up its sales force, says Katz. Symbol's products, he notes, have huge potential in homeland security, RFID, and health care. The company has been slashing costs, and that helped offset revenue weakness -- and should boost margins and profits, says Kevin Starke of investment firm Weeden. He cut his earnings forecast for 2005 from 32 cents a share to 29 cents on sales of $1.79 billion (down from a previous $1.82 billion), and for 2006 from 60 cents to 54 cents on sales of $1.90 billion (vs. $1.93 billion). But the stock, advises Starke, is still a buy.
Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.
By Gene G. Marcial