ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, October 5, 1996 TAG: 9610070040
SECTION: BUSINESS PAGE: A-4 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
99 PERCENT OF SHAREHOLDERS favor the plan to trade on the Big Board, the Roanoke company's president says.
Optical Cable Corp. of Roanoke is taking steps toward listing its common stock on the New York Stock Exchange, following a survey of shareholders who "overwhelmingly" favor the move.
Robert Kopstein, president of the fiber-optic cable manufacturer, said Friday that only one shareholder in the survey said Optical Cable should continue trading through the Nasdaq stock market. Kopstein said 99 percent supported the change. He did not say how many shareholders were included in the survey.
Executives of the company were in New York City Thursday to meet with NYSE officials and to retain Goldman, Sachs & Co. as its investment banker.
Kopstein said Optical Cable is working on meeting the requirements for listing on the nation's senior stock exchange. He said he does not yet know whether the Roanoke company can meet the NYSE's four-page list of standards or when a decision might be reached. NYSE officials, for instance, must determine whether the company and its industry will continue to grow.
Listing on the New York exchange also will be more expensive, Kopstein said. The cost to trade stock on Nasdaq's computerized exchange is $20,000, while the price of a New York listing would be $40,000 to $50,000. But he said that increase is outweighed by the benefits to shareholders, who will see more exact pricing of the company's stock and greater market stability.
Kopstein said Optical Cable wants to move because "one unmentioned market maker is running amok in the field" on the Nasdaq.
Optical Cable earlier complained to Nasdaq and the federal Securities and Exchange Commission that some investment speculators were short-selling its stock, or trading on the expectation that the price would drop in value. That means they were borrowing shares from other stockholders to sell at today's prices, hoping to buy shares to replace the stock they borrowed later, at a lower price.
Tyler Pugh, senior vice president at Wheat First Butcher Singer in Roanoke, said that short selling is not inherently a bad process. The general public has a right to sell a company short if investors believe its price will drop, he said..
Short selling, according to Pugh, assures a future purchase of shares and may actually tend to increase the value of the stock.
Optical Cable stock traded Friday just shy of $16 a share. On a pre-split basis, that equals about $60 compared to an initial offering price earlier this year of $10 a share.
While they were in New York, Kopstein and other executives also visited a forum attended by industry analysts.
Kopstein said several analysts questioned Optical Cable's high price earnings ratio, a measure which is obtained by dividing annual earnings by the price of the stock. As a general proposition, the lower the figure the better, meaning investors pay a low price for a company's potential earning power.
Optical Cable does not yet have a year's worth of earnings and so most services do not list a ratio. But Kopstein said its projected ratio is 80 or 90.
Pugh said that the Standard & Poor's average is about 18. He said General Electric is 22, Norfolk Southern is 16 and Sears is 171/2. Netscape, conversely, is 417.
Kopstein said companies that are growing rapidly and that are pioneers in a new field tend to have much higher ratios than do mature companies in stable industries.
LENGTH: Medium: 68 linesby CNB