Thornton Resigns at Wavetek After Stock Sale News
The resignation of Wavetek Chairman John Thornton was announced Thursday by the company, a move that Thornton and company officials said was unrelated to the disclosure earlier this week by Wavetek’s largest shareholder that it planned to sell its 20% stake in the firm.
Thornton was replaced as chairman by David B. Pivan, a 66-year-old management consultant who until two months ago was chairman of Intermec of Lynnwood, Wash., a publicly owned bar code equipment manufacturer. Pivan has been a Wavetek director for one year.
Thornton, who with his wife, Sally, holds 8% of the instrument manufacturer’s common stock, the second largest Wavetek holding by an individual or group, will retain a seat on the board. He joined the company as president in 1965, became chief executive officer in 1978 and chairman in 1983. Thornton stepped down as CEO in 1985 and has had little to do with Wavetek’s day-to-day operations since.
Shufro, Rose & Ehrman, an investment-management firm in New York, said earlier this week that it plans to sell its 1.8-million-share stake in Wavetek, expressing disappointment in Wavetek’s earnings and sales growth. The investment firm said it supported the sale of the entire company, something that Wavetek President John Battin said is not likely to happen.
In a brief interview, Thornton said he had planned for some time to retire as Wavetek chairman and that his timing relative to the Shufro, Rose & Ehrman disclosure was a coincidence. He declined all other comment on Wavetek matters.
The disclosure by Shufro, Rose & Ehrman that its shares were on the block has created little interest on Wall Street. Only 1,000 Wavetek shares were traded Thursday, closing unchanged at $7. The investment firm paid an average $7.60 per share for its Wavetek stock, according to a filing with the Securities and Exchange Commission.
“The problem is, this is a difficult company to sell,” said Peter Schleider, who has followed Wavetek as an investment banker with Wessels, Arnold & Henderson in Minneapolis. “The instrument business in general is a single-digit growth business. Wavetek goes up against Hewlett-Packard in some of its markets, and that’s a tough row to hoe.”
Wavetek and other instrument manufacturers have been hit hard by a trend in recent years for electronics hardware to be engineered to include “self-test capabilities,” Schleider said, making it tougher for “resident instrument” manufacturers such as Wavetek to make sales.
Irving Katz, director of research with Thomas Green/San Diego Securities, said that Shufro, Rose & Ehrman may be figuring that “by putting the company in play, someone will come out of the woodwork to buy it.” As of yet, no such buyer is materializing, judging from the tepid stock market interest in Wavetek, Katz said.
Declining to say Thursday if his firm has had any nibbles from possible buyers, partner Fred Ehrman said only that other Wavetek shareholders have called him to express support for his idea of selling the company. Neither Thornton nor Ehrman would say whether Thornton was one of those shareholders.
Shufro, Rose & Ehrman has been accumulating Wavetek stock over the past two years but “recently” became “disappointed with the rate of progress in the operations.” Ehrman said that his firm had hoped that Wavetek’s revenue would be “15% to 20% higher” than current levels and that fiscal 1988 earnings would reach the $1 per share level for the year to end Sept. 30, instead of the $.60 per share he anticipates for 1988.
For the six months ended April 2, Wavetek reported a $1.7-million profit, or $.19 per share, on sales of $43.8 million. For fiscal 1987, Wavetek reported a profit of $3.9 million, or $.42 per share, on sales of $82.6 million.
Shufro, Rose & Ehrman do not have board representation at Wavetek and have not sought it, Battin said.
Asked if he had been interested in getting the chairman’s job filled by Pivan, Battin said he was “indifferent on it. We have enough to do that it is just fine with me to have a partner to work with.”
