17.5% Plunge by EECO Stock Catches Its Officers by Surprise

A sharp 17.5% drop in the company’s stock price Monday took officials at EECO Inc. in Santa Ana by surprise, the company said Tuesday.

The Santa Ana-based electronics manufacturer’s stock plunged $1.75 to close Monday at $8.25 a share. EECO officials said that they know of no business-related reason for the decline. The stock, which trades on the American Stock Exchange, had sold for about $17 a share before the Oct. 19 stock market collapse.

In trading Tuesday, EECO stock rebounded 75 cents to close at $9.

“The market price decline is totally at variance with EECO’s business outlook for the remainder of 1987,” EECO President Robert C. Milo said in a statement Tuesday. “Current forecasts for fourth-quarter revenue and profitability remain optimistic over earlier quarters of 1987.”

One explanation for the stock’s decline could be that Prudential Bache Securities, a New York investment firm, put a 10,000-share block of EECO stock up for sale shortly before the close of trading Monday, according to S.A. Schlosser, EECO’s chief financial officer.

“I don’t know who (Prudential Bache) was representing,” Schlosser said. “I would expect (the stock price) to rebound in a day or two.”

Between 25% to 30% of EECO’s stock is owned by institutional investors. Company officers and founders own between 25% and 30% more, said Schlosser, adding that he was unaware of any large trades involving officers or founders.