Going Public Causes Private Woes : Market Crash Derails Prices of Most Newly Issued Stocks

Buying stock in California companies that went public in 1987 was a little like drinking too much California champagne: For many investors, the initial giddiness gave way to a painful, gut-wrenching hangover.

In a roller-coaster year for the stock market, most of the 85 companies that made initial public offerings saw their stock’s price careen off course in the upheaval of Black Monday and its aftermath, with many dropping far more than the major market indexes.

Only a handful of newly issued stocks posted a rise in value over the course of the year, and only a few others could outperform the Standard & Poor’s 500 index, a broad-based market barometer, according to data supplied to The Times by Lomas Publications of Austin, Tex.

“No group did real well,” said Paul Simmonds, research manager for the Institute for Econometric Research in Fort Lauderdale, Fla., which publishes a newsletter on initial public offerings. “Regardless of their size and their underwriters and their institutional interest, they just all fell--some not as dramatically as others, but they all fell.”

High-technology and entertainment companies landed on the lists of both top and weak performers among California initial public offerings. The stocks of Telenetics, a computer modem manufacturer, and High Resolution Sciences, which makes television and computer monitors, both enjoyed price increases of about 60%. Yet stock in Spectramed, which makes medical monitoring equipment, fell in price by more than 76%.

One of the worst performing of the new stocks was De Laurentiis Film Partners, a limited partnership that invests in the productions of the De Laurentiis Entertainment Group. With stakes in such box-office bombs as “Million Dollar Mystery,” the partnership’s share price fell from an initial $16.25 on Feb. 27 to 75 cents at the end of last week, a 95% deterioration.

On the plus side, Los Angeles-based Today Home Entertainment, which markets games and entertainment programming for viewing on home videocassette recorders, was a good play in the stock market, nearly doubling in price from its initial offering in mid-February.

While many of the newly public companies were obscure start-ups, some were well-known firms turning to the stock market for cash infusions during the thunderous bull run that preceded the crash.

Investors in the celebrated companies didn’t fare particularly well. The price of stock in Dick Clark Productions fell nearly 8% for the year. Shares in Fashion Channel Network, a cable-TV programmer that sells brand-name clothing over the air, have tumbled more than 69% in the three months since they were issued Oct. 2.

“The precipitous fall was really more market driven, than (based on) any specifics with the company,” said Mark W. Klein, chief financial officer of the Los Angeles-based firm. “Most of the drop happened within two to three weeks after we went public, and within a week after Oct. 19.”

Nationally, the year was the biggest ever for stock offerings, with 539 companies turning to the markets to raise $23.8 billion, compared to the $22.4 billion raised by 507 companies in 1986, according to IDD Information Services, a New York firm that compiles data on new offerings. But only 21 of the current year’s issues were offered after Black Monday.

“Companies are going to wait for a better market climate,” Simmonds explained. “Unless they can attract some institutional interest in their stock, there’s just no way they’re going to sell it to the retail public.”

NOTABLE CALIFORNIA COMPANIES’ IPOs

Shares IPO Price % Chg Company (Millions) Price Dec. 26 From IPO Dick Clark Productions 1.10 6.50 6.00 -7.69 Petrolane Partners 12.50 20.50 16.00 -21.95 Boys Markets 1.40 10.25 7.25 -29.27 Foodmaker 4.00 13.50 9.13 -32.37 Sharper Image 1.44 10.00 6.00 -40.00 St. Ives Laboratories 1.95 13.00 7.00 -46.15 Price Pfister 2.00 15.00 7.50 -50.00 Charles Schwab 8.00 16.50 6.50 -60.61 Fashion Channel Net. 1.50 10.50 3.25 -69.05

Company Business Dick Clark Productions TV production Petrolane Partners Natural gas Boys Markets Supermarkets Foodmaker Jack-in-the-Box Sharper Image Retailer St. Ives Laboratories Hair care products Price Pfister Plumbing fixtures Charles Schwab Brokerage Fashion Channel Net. Home shopping TV

WEAK-PERFORMING CALIFORNIA IPOs

Shares IPO Price % Chg Company (Millions) Price Dec. 26 From IPO Finest Hour 0.70 5.00 0.13 -97.40 De Laurentiis Film 1.65 16.25 0.75 -95.38 Presto-Tek 1.00 5.50 0.75 -86.36 Automedix Sciences NA 1.50 0.25 -83.33 Spectramed 3.64 11.00 2.63 -76.09 Psychemedics 1.50 2.00 0.50 -75.00 Alpharel 2.00 11.00 2.75 -75.00

Company Business Finest Hour Photo processing De Laurentiis Film Film production Presto-Tek Vending machines Automedix Sciences Hospital care Spectramed Medical monitors Psychemedics Lab testing serv. Alpharel Management sys.

STRONG-PERFORMING CALIFORNIA IPOs

Shares IPO Price % Chg Company (Millions) Price Dec. 26 From IPO Today Home Entertain. NA 1.67 3.25 94.61 Telenetics NA 1.25 2.00 60.00 High Resol. Sciences 1.00 3.00 4.75 58.33 Network Equip. Tech. 2.50 16.00 19.00 18.75 Networked Pict. Sys. NA 2.00 2.25 12.50 Digital Microwave 1.85 15.00 16.00 6.67 MDT 1.15 5.50 5.63 2.36

Company Business Today Home Entertain. Video programs Telenetics Modems High Resol. Sciences TV monitors Network Equip. Tech. Communications Networked Pict. Sys. NA Digital Microwave Microwave MDT Sterility assurance

IPOS BY CALIFORNIA COMPANIES The Standard & Poor’s 500 close on Dec. 28 was 245.57. List does not include companies that issued units of multiple shares or warrants.

IPO IPO PRICE % CHG. % CHG. DATE COMPANY NAME PRICE DEC. 28 FROM IPO S&P; 500 Jan. 7 Dick Clark Productions 6.50 6.00 -7.69 -3.82 Jan. 15 Finest Hour 5.00 0.13 -97.40 -7.50 Jan. 22 MDT 5.50 5.63 +2.36 -10.35 Jan. 22 Psychemedics 2.00 0.50 -75.00 -10.35 Jan. 23 Network Equipment Tech. 16.00 19.00 +18.75 -9.08 Jan. 28 Presto-Tek 5.50 0.75 -86.36 -10.83 Feb. 6 Gascard Club 5.00 2.00 -60.00 -12.31 Feb. 12 Today Home Entertain 1.67 3.25 +94.61 -10.90 Feb. 12 American Health Prop 20.00 15.00 -25.00 -10.90 Feb. 24 Foodmaker 13.50 9.13 -32.37 -13.19 Feb. 26 Excelan 12.00 11.50 -4.17 -13.21 Feb. 26 TCW Convertible Sec 10.00 6.38 -36.20 -13.21 Feb. 26 Sensor Control 5.25 3.75 -28.57 -13.21 Feb. 27 De Laurentiis Film Part. 16.25 0.75 -95.38 -13.59 Mar. 3 HDL Communications * 0.02 0.02 None -13.57 Mar. 5 Riverbend International 9.00 5.63 -37.44 -15.47 Mar. 12 California Energy 7.50 3.38 -54.93 -15.68 Mar. 19 Petrolane Partners, L.P. 20.50 16.00 -21.95 -16.50 Mar. 20 Agouron Pharmaceuticals 10.00 8.00 -20.00 -17.64 Mar. 25 Escagen 9.00 4.13 -54.11 -18.25 Mar. 25 Automedix Sciences 1.50 0.25 -83.33 -18.25 Mar. 27 Allstar Inns 12.50 6.50 -48.00 -17.07 Mar. 27 Country Wide Transpt Svs 15.00 5.25 -65.00 -17.07 Apr. 1 A.M.E. 13.50 8.25 -38.89 -16.01 Apr. 8 Amplicon 12.25 11.25 -8.16 -17.39 Apr. 10 Nicholas-Applegate Grwth 10.00 5.75 -42.50 -16.04 Apr. 15 Freymiller Trucking 13.00 8.25 -36.54 -13.67 Apr. 28 Sharper Image 10.00 6.00 -40.00 -13.08 Apr. 29 Networked Picture Syst 2.00 2.25 +12.50 -13.70 May 5 High Resolution Sciences 3.00 4.75 +58.33 -16.85 May 15 Boys Markets 10.25 7.25 -29.27 -14.56 May 19 Digital Microwave 15.00 16.00 +6.67 -12.18 May 19 Liposome Technology 12.00 3.75 -68.75 -12.18 May 19 Nellcor 16.00 7.88 -50.75 -12.18 May 21 Data Technology 11.00 4.00 -63.64 -12.35 May 28 Komag 12.00 9.25 -22.92 -15.54 Jun. 4 Alpharel 11.00 2.75 -75.00 -16.77 Jun. 5 Southwall Technologies 11.75 5.00 -57.45 -16.32 Jun. 10 Int’l Microeletronics 5.50 3.25 -40.91 -17.45 Jun. 10 ECAD 8.50 5.63 -33.76 -17.45 Jun. 11 Impact Systems 8.50 5.00 -41.18 -17.80 Jun. 19 Spectramed 11.00 2.63 -76.09 -20.00 Jun. 23 Mycogen 11.00 4.75 -56.82 -20.38 Jun. 25 Plant Genetics 9.50 5.50 -42.11 -20.52 Jun. 25 Showscan Film 10.00 6.25 -37.50 -20.52 Jun. 25 HOH Water Technology 2.00 0.63 -68.50 -20.52 Jun. 30 Lincoln Bancorp 8.75 5.88 -32.80 -19.22 Jul. 1 Advanced Marketing Serv 13.00 6.50 -50.00 -18.94 Jul. 1 Delphi Information Syst 7.50 3.13 -58.27 -18.94 Jul. 17 St. Ives Laboratories 13.00 7.00 -46.15 -21.94 Jul. 21 FileNet 16.00 11.50 -28.13 -20.41 Jul. 22 Fair, Isaac 9.50 4.75 -50.00 -20.39 Jul. 22 National Insurance Group 12.00 11.50 -4.17 -20.39 Jul. 23 Everex Systems 11.00 6.25 -43.18 -20.22 Jul. 29 Price Pfister 15.00 7.50 -50.00 -22.20 Jul. 30 Continental Graphics 10.50 5.75 -45.24 -22.79 Jul. 31 Telenetics 1.25 2.00 +60.00 -22.94 Aug. 11 Teradata 20.00 15.00 -25.00 -26.33 Aug. 11 XScribe 8.00 3.25 -59.38 -26.33 Aug. 12 Indtech 1.00 0.63 -37.00 -26.12 Aug. 14 Domain Technology 10.00 4.25 -57.50 -26.47 Aug. 19 Harding Associates 12.50 10.00 -20.00 -25.55 Aug. 20 Provena Foods 7.00 3.00 -57.14 -26.66 Aug. 20 Alliance Imaging 7.00 5.50 -21.43 -26.66 Aug. 26 Advanced Poymer Syst 7.00 5.75 -17.86 -26.60 Sep. 2 CAM Data Systems 5.00 1.75 -65.00 -23.66 Sep. 3 Earth Technology 9.00 2.75 -69.44 -23.31 Sep. 11 Rainbow Technologies 5.00 3.00 -40.00 -23.73 Sep. 16 EMCON 18.00 11.25 -37.50 -22.01 Sep. 18 Vision Technologies Int’l 1.00 0.81 -19.00 -22.01 Sep. 18 J.M. Peters 6.00 4.13 -31.17 -22.01 Sep. 22 Centex Telemanagement 9.00 7.75 -13.89 -23.14 Sep. 22 Charles Schwab 16.50 6.50 -60.61 -23.14 Sep. 28 Flextronics 10.00 5.75 -42.50 -24.02 Sep. 30 Gen-Probe 7.00 4.31 -38.43 -23.70 Oct. 2 Fashion Channel Network 10.50 3.25 -69.05 -25.15 Oct. 16 Blyth Holdings 7.00 6.00 -14.29 -13.13

* HDL Communications last price of $0.02 from Dec. 7.

Source: Lomas Publications