Genisco Technology Stock Shoots Up 120%
Genisco Technology Corp. common stock nearly quadrupled in value this week on word that a major cash infusion is in the works.
Shares of the Anaheim-based company, which makes customized computer systems for the military, closed Friday at $4.125, up $3.25 for the week.
Most of the gain came Friday in American Stock Exchange trading, with the stock rising $2.50 a share--a 120% increase for the day--apparently buoyed by a management change announced Thursday.
Genisco, which is selling a money-losing electronics division and manufacturing plant with 45 employees in Mexico, had said previously that a private investment firm has agreed to buy $5.4 million of its debt and convert it to common stock. The firm will end up owning 91% of Genisco’s common shares but has said it does not intend to take the company private.
Genisco also has announced plans to raise $5 million through a private placement of stock.
On Thursday, Genisco said that Phillip C. Friedman, longtime chairman and largest shareholder, had resigned as part of the pending deal. He was succeeded as chairman by Harmon Handy, a high-technology industry entrepreneur, and as president and chief executive by Jerome J. Gross, who had been Genisco’s vice president and general manager of its largest unit.
Trading heated up Friday, in the wake of that announcement, with about 10% of the company’s 804,988 shares of common stock changing hands.
No Wall Street analysts follow the company because its stock has been so thinly traded and the price so low in recent years.
Genisco Controller Thomas W. Kane said Friday, however, the stock price appears to have soared on investor anticipation that the pending cash infusions will benefit the company in its efforts to expand through acquisition of other computer-related businesses.
For its latest fiscal year, Genisco reported a loss of $4.7 million on sales of $12.7 million. For the current year, Kane said, it will take a loss of $520,000 on the sale of its electronics division.
The sale of that unit, scheduled to be completed next week, will cut Genisco’s employment to 65 people, all at its Anaheim headquarters, which also is home to its Solaris military computer system division.
Kane said the company is looking for acquisitions that will move it out of the military arena. Federal defense spending cuts, which have devastated many companies dependent on military supply contracts, are expected to continue at least through 1995, he said.
