ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, May 22, 1996 TAG: 9605220030
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
Trading in shares of Optical Cable Corp. lately has been as hot as the mid-May weather and the Roanoke County company is starting to draw the attention of the national investment media.
The fiber-optic cable manufacturer's common stock closed in trading on the Nasdaq Stock Market on Tuesday at $59 per share, up $10 after hitting a high of $70 during the day. The stock's price had risen $12 a share on Monday.
The company first offered its stock to the public at $10 a share in March and just a month ago it was still trading around that initial offering price.
"It's kind of unbelievable," said one local retiree, who bought the stock at $10 per share. "I'm just amazed and just lucky I've got what I do have and sorry I don't have a little bit more."
Optical Cable President Bob Kopstein said that interest in his company's stock picked up about a week and a half ago after the company advertised its quarterly earnings report in Investors' Business Daily. The company reported a $2.77million profit, equal to 18 cents per share, in its first quarter ended Jan. 31, a 93 percent increase over the corresponding quarter a year earlier, and sales of $10.3million, a 27 percent increase.
Over the past few weeks the company has also announced some lucrative new contracts, including a deal at the University of Rhode Island to link 95 buildings with its fiber-optic cable and a large order from Graybar Electric Co., a national distributor of electrical and communications products.
Local stockbrokers attribute the skyrocketing stock price to the fact that the company is associated with the hot telecommunications and Internet business arena and that the relatively small number of shares available for trading isn't enough to satisfy demand of investors.
"Like the stars in heaven, all these things are coming together," remarked Tyler Pugh, vice president of Wheat First Butcher Singer, a securities brokerage in Roanoke.
In March, the company took the unusual step of offering 1.5million shares without the aid of an underwriter, a broker or group of brokers who guarantee to buy shares and distribute them to investors.
Optical Cable's offering resulted in the sale of 670,000 shares, generating $6.7 million that will help finance a doubling of the company's factory at Valleypointe, a business park in north Roanoke County.
Kopstein had worked with two investment banking firms on a potential stock sale last year. However, he ended that effort before the sale took place. He said, saying he was not satisified with the way the two firms were marketing the stock. Kopstein said he had wanted information on the sale distributed to individual investors who were already familiar with the company but they weren't getting the information.
The offering this year generated sales to 850 investors, including some large institutional investors, Kopstein said. Of those investors about half were from Virginia and about 150 from the Roanoke region, he said.
So far, local investors may be holding on to the stock to see where its headed rather than selling it for a profit.
Bill Nash, who manages the Scott & Stringfellow Inc. brokerage office in Roanoke, said it appears that not many of the recent transactions involving Optical Cable's stock are taking place in the Roanoke area.
A week ago, Optical Cable's directors approved a 2-for-1 stock split to be paid on May 31.
Part of the reason for the split, Kopstein said, is to even out daily trading volume and increase the ability of investors to convert their shares to cash without affecting the stock's price.
The split, which will immediately cut the price of the stock in half, will also make it easier for potential shareholders to buy the stock, Kopstein said.
Kopstein and a partner, both former workers at ITT Night Vision in Roanoke County, formed Optical Cable in 1983 with the financial backing of other Roanoke Valley residents. Kopstein bought out the others in 1989 and now owns 9 million shares of the company's stock.
The company, which employs 110 people, makes a durable coated cable used to link high-speed computer networks and for other communications. The company's product is unlike its competitors' in that it can operate at a higher temperature range, is hard to damage, can be installed without special precautions and can be used both indoors and outdoors, Kopstein said.
"It's a good company with a good niche market," observed one local broker, who was reluctant to have his name used. "Stocks go up and stocks go down; this one's had a good ride," he said.
It may ride a bit further.
A financial reporter for the CNBC cable television network will interview Kopstein at 9 a.m. Thursday. Kopstein said he hopes that kind of exposure will raise the company's profile among potential fiber-optic cable customers.
LENGTH: Medium: 89 lines ILLUSTRATION: PHOTO: CINDY PINKSTON/Staff. Mary Hardy and Barbie Collinsby CNB(foreground) measure and test sections of optical fiber at Optical
Cable Corp. at Valleypointe, a
business park in north Roanoke County. color.