3D SYSTEMS SEES GAINS
(Los Angeles Daily News; 04/15/98)
After years of disappointing performance, shares in high-tech manufacturer
3D Systems Corp. have gained nearly 80 percent in 1998, making it one of the
region's hottest issues.
But no one seems to know precisely why.
"I can't put my finger on any one event," said analyst Bryant Riley, at Los
Angeles-based B. Riley & Co. "Frankly, it's been surprising."
The company wrote off some inventory last year, restructured its European
operations and has launched a new product line, said analyst James McIlree at
Loewenbaum & Co. in Austin. "It adds up, but does it add up to so much? I
Company officials could not be reached for comment.
3D Systems makes machines that take computer-generated design files and,
using lasers, light-sensitive resin and ink-jet-like printer heads, render
three-dimensional prototypes of the products. The machines, and others made by
3D's competitors, are especially popular among automobile manufacturers, which
use them to quickly create prototypes of new parts.
Despite the company's widely acknowledged cutting-edge technology, 3D
have been a disappointment from the start, as the company's revenues and
earnings failed to match early expectations. 3D shares ended 1989 - their
year of trading - at just over $41, but fell precipitously until September
1992, when they bottomed out at around $3 apiece.
Over the next 5-1/2 years, the stock was able to scramble back only another
$3 or so, opening 1998 at $6.37. But since then, 3D shares have fairly soared,
closing Tuesday at $11.187.
It's not because of earnings. For the year ended Dec. 31, the company lost
$4.6 million, or 40 cents a diluted share, on $90.3 million in sales. That
compared to net earnings of $4.6 million the previous year on $79.6 million in
So why the sudden investor confidence? A partial answer might lie in sales.
Though restructuring costs sucked up much of the gain, 3D sales in Europe were
up by nearly 50 percent last year. And domestic response to the company's new
line of rapid prototypers reportedly has been strong, with each of the Big
Three carmakers ordering units.
Another factor could be that the company last year named Richard
president, shifting 3D founder Charles Hull to the new position of chief
"Every company as they get bigger and older needs to change their
organization. They did that and that might be one of the reasons the stock's
moving, too," said McIlree.
But ultimately, McIlree and Bryant said, perhaps the biggest factor driving
up 3D stock is a healthy dose of insider purchasing in recent weeks by
Balanson, Hull, Chief Executive Officer Arthur Sims and two vice presidents.
All told, the executives have bought more than 50,000 shares in their company
When insiders who presumably know the true state of a business start
gobbling up stock it's usually an indication of management's confidence in the
"People like to see that," Riley said. "It makes them feel good (about the
A combination of improved sales, new management and inside buying has
push the price of 3D Systems Corp. in Valencia up nearly 80 percent since the
start of 1998.
Jan. 6, 1998: 6 1/8
March 24, 1998: 11 7/8
April 14, 1998: 11 3/16
SOURCE: Daily News research; Bloomberg News
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