A Tale of Two Techies

Greg Miller covers high technology for The Times. He can be reached at (714) 966-7830 and at greg.miller@latimes.com

Sync Research Inc. and PairGain Technologies Inc. both make products used to build computer networks, which places them in a rapidly growing industry and helps explain why their stocks soared to around $45 per share last fall.

Their paths have diverged since then, however, and their cases illustrate just how baffling Wall Street can be.

Sync has garnered endorsements from heavyweights including AT&T;, IBM and Sprint, and its products have gotten great reviews from early customers. So naturally its stock price has plummeted to $19 per share.

PairGain, on the other hand, was sucked into a financial scandal in December after the company announced it had lost $16 million because its investment advisor gambled away the money on unauthorized trades. So logically its stock price has rocketed past the $65 mark.

"That's the fickleness of the investment world," said Paul Johnson, an analyst at Robertson Stephens & Co. in New York City who follows both companies.

Actually, there is a rational (or maybe it's irrational) explanation for all of this.

It's true, Johnson said, that PairGain made a boneheaded choice in selecting a Beverly Hills broker, S. Jay Goldinger, who had a shaky track record. But that $16-million loss is over, and amounts to pocket change compared to the $107 million in sales the company had last year, after sales of $60 million in 1994.

Sync Research, in contrast, had lost money for four consecutive years before it went public last November. Despite that fact, investors caught up in last year's technology frenzy tripped over each other to buy Sync stock, bidding its price from $20 to $44 per share on its first day of trading. Since then, investors have realized it was overvalued and started selling, Johnson said.

"The move from $20 to $45 was just as confusing as the move from $45 to $20," Johnson said. In terms of Sync's prospects, "very little has changed," said Johnson, who remains a fan of Sync as well as PairGain.

"I expect both companies to do very well," Johnson said.

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