A Stock Offering That Should Fit In Your Schedule
If the “paperless society” is ever to become a reality, a lot of people will have to give up their pen-and-paper routines for hand-held electronic devices. It’ll happen--but certainly not soon enough to tarnish the upcoming initial stock offering of Fullerton-based Day Runner Inc.
Day Runner is the leading maker of paper-based personal organizers. The product was the 1982 brainchild of Boyd and Felice Willat, two Hollywood film production coordinators who struggled to keep track of their own manic work and social schedules.
When they hit on the idea of a combination organizer/calendar/address book geared toward busy executives and entrepreneurs, the Willats found a huge audience waiting with pens in hand:
* Just since 1987, Day Runner’s annual sales have soared from $11.1 million to $53.2 million.
* The firm’s organizer and planner line--ranging in price from $10 to $250, depending on how upscale you feel--now is sold in 6,000 stores nationwide, including such major office supply chains as Staples, Office Depot and Bizmart.
It’s the kind of success story that Wall Street loves: The business is easy to understand, it’s already nicely profitable and the product fills a need that isn’t likely to disappear anytime soon. Maybe the only surprise is that Day Runner took this long to decide to sell stock.
In the offering, expected in the next few weeks, Day Runner will sell 1.4 million shares to the public. Of the total, 1 million shares will be sold by the company, which will use the proceeds to pay off bank debt ($6.5 million) and to expand the business. The other 400,000 shares will be sold by major holders, including the Willats. San Francisco-based brokerage Montgomery Securities is managing the offering, but some Southland brokerages will participate, including Crowell, Weedon & Co.
The stock is expected to be sold at $12 to $14 a share, depending on demand. In that price range the shares should be well-received by investors, says Norman Fosback, who publishes the New Issues stock newsletter in Ft. Lauderdale, Fla. Because so many new stocks coming to market today are young companies with little or no earnings history, Day Runner’s story is a “breath of fresh air,” Fosback says.
The company earned 72 cents a share last year, based on the 4.85 million shares to be outstanding after the stock sale. If the stock comes to market at $14 a share, its price-to-earnings ratio will be 19. For a company whose earnings grew 29% in 1991, a price-to-earnings ratio of 19 looks very reasonable: A “P-E” that’s less than the company’s growth rate usually indicates a bargain.
But can Day Runner grow over the next five years as it has over the past five? Competition already is tough in the personal-organizer business, since a good idea always encourages copycats. But Day Runner’s management wins high marks from its retailers for staying on top.
“They’re very competitive on price,” says a purchasing executive at one major national retailer who requested anonymity. “I don’t think anybody is going to displace them soon.”
A longer-term threat is the so-called personal information management device--such as the electronic Wizard marketed by Sharp Co. These calculator-size machines were introduced in the late-1980s as the electronic answer to the paper organizer/calendar/address book. They’ve been popular, but there is no sign that most people are willing to forgo pen and paper completely. In fact, Day Runner’s own research shows that professionals at high-tech companies still represent its largest customer group.
Even so, another technological breakthrough is on the horizon that could affect Day Runner later in the decade: pen-based computer devices that allow users to record data electronically via normal handwriting on a special pad.
In the stock-offering prospectus, Day Runner indicates that it’s very aware of the competitive possibilities, though the firm doesn’t get specific. The company says only that “Day Runner plans to introduce personal information management software and related products aimed at computer users, and for the longer-term is exploring the potential of integrating technology with its paper-based organizing products.”
Chris Goodhue, analyst at the Gartner Group technology research firm in Stamford, Conn., says it’s unlikely that pen-based electronic systems will replace paper in the immediate future. “We’re not going to see major acceptance of this technology until maybe 1994,” he says.
Day Runner’s stock will be listed on the NASDAQ market, under the symbol DAYR.
Day Runner’s Growth Track The financial success of Day Runner Inc., the Fullerton-based maker of personal organizers and planners, will probably guarantee a hot market for the firm’s first public offering of stock in March. As sales soar . . . (in millions) . . . earnings follow. (in millions) Source: Day Runner prospectus
