ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, May 24, 1996 TAG: 9605240051
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
Optical Cable Corp. of Roanoke, whose common stock has seen a dramatic run-up in price this week, may offer investors more shares by late summer or early fall, the company's president said Thursday.
Bob Kopstein mentioned the potential new stock offering when he appeared briefly on the CNBC cable television network Thursday morning in an interview about the phenomenal rise in the stock price. The company also was mentioned Thursday in The Wall Street Journal's "Small Stock Focus" column.
Kopstein faced some fairly tough questioning from CNBC commentators, who wanted to know how Optical Cable differs from its competitors and why it deserves the attention investors are giving it.
Optical Cable first offered stock to the public in March at $10 per share. The stock, which trades on the Nasdaq market, began this week priced at $37 a share and closed Thursday at $110 per share, with a $31 gain from Wednesday's close. During Thursday's trading, 674,700 shares changed hands, only a few thousand shares short of the total number of shares held by the public.
Kopstein said the company may make a small stock offering, perhaps 500,000 shares, later this year, with proceeds to be added to cash reserves in case the company needs to move quickly on potential business opportunities. Optical Cable also has declared a two-for-one stock split, effective May 31 for investors who held its stock May 15.
Another stock sale solely to increase the company's cash holdings would dilute the company's earnings per share, said Charlie Merriman, an investment banker with Scott & Stringfellow Inc. in Richmond. That might not be the case if the money were invested fairly quickly into new production or some other higher-performing type of asset.
About 9.7 million shares of Optical Cable are outstanding. Kopstein, who was the sole owner of the company before the public offering, holds 9 million shares.
Based on Thursday's closing price, investors are saying the 110-employee company is worth more than $1 billion, which has local stock brokers scratching their heads over their inability to explain the rapid price increase. Some have suggested that, with the small number of shares available for trading, the price increase may simply be a matter of not enough supply to meet the demand.
Merriman noted that Optical Cable's stock was trading Thursday at about 200 times the company's earnings over the previous 12 months, compared with Roanoke Electric Steel Corp., which was trading at six times earnings and General Electric Co. at 25 times earnings.
Optical Cable took the unusual step of offering 1.5 million shares without securities firms acting as underwriters to guarantee the sale. Kopstein sold shares by placing advertisements in publications and distributing the prospectus to households. Before the offering closed, 670,000 shares had been sold.
Optical Cable had worked with two underwriters in a proposed offering last year, but the company and the underwriters parted ways before Kopstein decided to go it alone. The proposed selling price in the aborted offering was $8.50 a share.
LENGTH: Medium: 62 lines ILLUSTRATION: PHOTO: (headshots) Kopstein. color.by CNB