Bishop Risks Being Cut From NASD Stock Listing

The National Assn. of Securities Dealers may drop Bishop Inc. from its up-to-the-minute nationwide computerized stock listings because the company doesn’t meet new, stricter financial requirements recently imposed by the organization.

The Westlake Village company’s $2.8-million net worth on Dec. 31 was far below the $4 million that is required for membership in the NASD’s revised National Market System. Net worth is usually defined as a company’s total assets minus total liabilities.

NASD spokesman Enno Hobbing said actual delistings of companies will begin March 31.

“We are going to appeal this,” said Bishop President Kenneth Kay. “We are going to do everything we can to remain listed on the National Market System.”

The NMS is an electronic scoreboard of sorts that reports every trade of a company’s stock within 90 seconds, and gives stockbrokers and investors a quick read of how a particular stock is being valued. If Bishop is dropped from the NMS and trades on a smaller, regional stock exchange, the price of its stock could suffer, according to analysts.

‘Fewer Investors Aware’

“I think the visibility in the stock would decline and there would be fewer investors aware of it,” said Norman Fosback, editor of Market Logic, an investment newsletter that covers the over-the-counter stock market. “Any time you reduce the universe of people that know of a stock, you reduce the demand. And that could mean a drop in price.”

Hobbing said a company such as Bishop would have to convince the NASD that its financial condition is improving and that it can soon meet the revised standards in order to circumvent the new requirements.

Bishop may have a hard time making such a claim.

The company has experienced numerous problems in recent years largely because it reacted slowly to the computerization of its industry. Bishop supplies engineers and draftsmen with the materials they need to design circuit boards, the plates of wires and connectors that power everything from television sets to space vehicles.

During the last three years, the company’s losses have grown steadily.

Losses Slowed

Recent attempts at restructuring have slowed the losses but haven’t stopped them. In the latest quarter that ended Dec. 31, Bishop lost $79,000 on revenue of $2.2 million, compared to a loss of $322,000 on revenue of $2.4 million in the same period a year earlier. For the year that ended Sept. 30, Bishop lost $2.5 million on revenue of $10 million.

The NASD’s push to tighten its membership standards began in January when it got approval from the Securities and Exchange Commission to delist some of its members if they do not meet new financial requirements. It is part of an effort by the NASD to shore up its image and clean out companies that faltered after the October, 1987, stock market crash.

“In order to show the quality of our market, we thought we would raise the qualification standards,” Hobbing said. The NASD claims that it is more difficult to obtain membership in the NMS than in the American Stock Exchange.

If Bishop is delisted from the NMS, the company’s stock would either trade on a regional exchange such as the Pacific Stock Exchange or be relegated to the so-called pink sheets, a relatively obscure system that summarizes the high and low price of a particular stock at the end of each day. Some pink sheet stocks only trade on an irregular basis, and their owners can find it more difficult to sell their holdings.

Bishop’s stock closed Monday at $1.50.