Ex-Pentagon Deputy Takes Big Flyer on Computerbase
It’s not an investment for the faint-hearted, but a former Pentagon boss who just became the biggest shareholder in Computerbase International Inc. of Irvine believes the tiny technology firm is a potential highflier.
And according to his admirers, Paul Thayer knows a highflier when he sees one.
“Obviously, I wouldn’t have invested in them if I hadn’t thought that they had a fair amount of potential,” said Thayer, who recently purchased 15% of Computerbase’s common stock after joining its board of directors and taking charge of its long-range planning.
“It’s not exactly a low-risk venture,” Thayer conceded in a telephone interview from his Dallas office. “But it’s like any risk-reward situation that one gets into. Usually, the greater risk you take, the greater the reward.”
Thayer, 67, knows something about risk.
A former Navy fighter-pilot ace, he was chairman and chief executive officer of LTV Corp., a $6-billion industrial giant, when President Reagan appointed him deputy defense secretary in 1983.
Thayer oversaw day-to-day operations at the Pentagon until his unexpected resignation on Jan. 4, 1984. The next day, the Securities and Exchange Commission filed a civil case accusing Thayer of providing friends and associates with illegal inside information about proposed acquisitions involving corporations on whose boards he served.
Thayer eventually pleaded guilty to charges of obstructing justice. He spent a year in a federal prison and six months in a halfway house. After his release in December, 1986, he stayed out of sight until his unexpected alliance with Computerbase was announced in late June.
In addition to his responsibilities as a director and long-range planner, Thayer has assumed responsibility for raising funds and soliciting potential purchasers of a new defense-related computer system designed by Computerbase.
The system is a combination of hardware and software utilizing the ADA computer language chosen by the government for future defense equipment. Computerbase hopes to market its design for use in “embedded” systems such as aircraft navigation devices.
Computerbase Chairman Richard Manweller estimates that if Thayer’s missionary work pays off, the company’s revenues could soar from $2 million to $200 million within five years.
If that occurs, the value of Computerbase’s common stock would take off, too. Traded by a handful of over-the-counter market makers, Computerbase shares were selling last week for 30 cents to 35 cents per share. Brokers said the stock has traded within a range of about 15 cents to 35 cents in the last six months.
Even at the high end of that range, some market makers consider the stock a buy.
“I’m not going to tell just any Tom, Dick or Harry to buy this particular stock, but I would invite people who are knowledgeable to invest,” said Mark Salaman, vice president of Escalator Securities of Willow Grove, Pa.
“The future is just beginning for this company, and its prospects are attractive.”
In effect, Salaman said, an investment in Computerbase has become an investment in Thayer.
Interest in the stock increased significantly when Thayer’s involvement with the company became public knowledge, Salaman said. It received an added boost when Computerbase announced that Thayer had become its largest shareholder.
Thayer purchased about 15 million of Computerbase’s 104 million shares outstanding in privately negotiated transactions with other officers and directors of the firm. At 30 cents a share, his 15% stake has a market value of $4.5 million.
Thayer reportedly paid only about $1 million for his Computerbase stock, but he refused to discuss the price: “I don’t think that’s anybody else’s business but my own.”
Computerbase has not yet reported its financial results for the fiscal year ended April 30, but chief financial officer Ted Aroney said the company will probably report a net loss of about $1.2 million on revenue of $1.3 million, contrasted with a loss of $463,000 on revenue of $2 million a year earlier.
Aroney said he considers the company’s red ink to be an “investment” instead of a loss, noting that Computerbase is a start-up company with heavy research and development expenditures and relatively limited current sales.
Although Aroney is prohibited from offering investment advice regarding Computerbase stock, he said he has sunk a significant amount of his own funds in the company.
“I have a lot of stock,” Aroney said. “I have a lot of belief in Computerbase. I’ve put a lot of money where my belief is. Now, with Paul Thayer, I have even more belief that it will be a success.”
Aroney said Computerbase is applying for listing on the National Assn. of Securities Dealers Automated Quotations (NASDAQ) system, which would allow brokers across the country to obtain computerized price quotes and other information on the stock.
In addition, there is talk of a reverse stock split that would reduce the number of outstanding shares but increase the price per share. Both moves could have the effect of increasing investor interest in the company.
Although Computerbase is still a small player in the defense technology industry, it is setting its sights high. Aroney believes that within a few years, the company will have grown sufficiently to earn a listing on the New York Stock Exchange.
“If you go back and look at the IBMs and the Apples, everybody starts out with an idea,” Aroney said. “It looks like we’re getting the breaks now, and hopefully we’ll become a big company. This is how fortunes are sometimes made.”
