Beckman Spinoff, New Product Get a Ho-Hum

Beckman Instruments in Fullerton has spent $50 million in research over the past 3 years for a single new product line called a clinical chemistry analyzer, President Louis Rosso said last week.

For that kind of money, some investors may be expecting a breakthrough that will shake the clinical laboratory industry.

But even though analysts expect the new product line to be successful, they said it is unlikely to have more than a moderate impact on future business of the Orange County maker of diagnostics equipment and analytical instruments.

And that attitude also typifies the reaction on Wall Street to the pending spinoff of Beckman Instruments this summer by parent company SmithKline Beckman Corp., a Philadelphia pharmaceutical giant.

Beckman, analysts note, tends to be a steady but unspectacular performer. In 1988, for example, its earnings grew a respectable 9.3% to $42.5 million, while revenue increased 11.4% to $770.3 million.

This year, analysts expect revenue to grow about 10%, with earnings growth a little higher.

That kind of predictable growth will make Beckman a stable but not dynamic investment after the total spinoff by SmithKline, which is merging with a British drug company, analysts said.

SmithKline spun off about 15% of Beckman’s shares to outside investors last November. But the company is not yet considered by analysts as a “true investment play” because SmithKline still owns the lion’s share of its stock.

Beckman stock closed Friday at $19.625 per share, down 25 cents for the week on the New York Stock Exchange.

“To me, it’s an interesting company. But to most people, it won’t impress them as exciting,” said Linda Miller, an analyst with the New York brokerage firm of PaineWebber.

One reason Beckman won’t grow at a torrid pace is that it already has a large and established position in markets in the United States and dozens of foreign countries.

Also, thousands of different products are used by medical instruments buyers, which means that a new product might be highly advanced, but its sales won’t necessarily shoot through the roof.

Analysts said they consider a new biological research instrument developed by Beckman to be superior to other products on the market, but it will account for only about $15 million, or 2%, of Beckman’s sales for next year.