Savino Business Machines, Corp., the marketer of Japanese-made plain paper copying machines whose formerly high-flying stock lost 40 per cent of its previous value, in trading over the past week, made a partial comback today.
But the $1.25 a share gain to close at $29 on the New York Stock Exchange, compared with $46.875 a week ago, was small consolation to Savins management.
It is still stunned by the market's reaction last week to what Savin management considered old news - that its Japanese supplier, Ricom, Co., Ltd., might try to sell its own photocopying machines in the U.S. in violation of its exclusive supplier contract with Savin.
That possibility was indicated in a long footnote to Savin's most recent annual report, released on Aug. 1, which noted a potential "adverse effcet" on Savin's business if that should happen. The footnote added that "management anticipates no interruption in its supply of copiers," and that its lawyers report that its licensing and manufacturing contract with Ricoh is "valid and enforceable."
There was no apparent impact on Savin's stock from this statement. According to the "efficient market theory," popular with many academic observers of the stock's price at any time reflects all available information about a company. So much for theories.
On Wednesday, Sept. 28, William Conway, the president of Nashua Corp., a company that distributes Ricoh copies abroad, met with analysts in Boston. He was asked about Nashua's relationship with Ricoh and reiterated a view that, in the future, Ricoh might try to change its distribution agreement and take over sales of its own copiers.
An account of the meeting, carried after the market's close on the Dow Jones news wire and in the Wall Street Journal on Thursday morning, had and immediate and devastating effect on Savin's stock and to a lesser extent on the shares of the Nashua Corp.
Savin dropped $6.25 a share Thursday on high volume, $4.375 on Friday, $3.25 on Monday of this week, recouped $1 on Thuesday, but slid $6.875 on Wednesday, apparently as a result of margin calls coming in. The net loss was $19.75 for five days.
"It's incredible, one rumor begets another rumor," Savin president Robert K. Low said in a telephone interview today. He complained that the possibility of some future change in Savin's supply relationship with Ricoh had been interpreted to mean an imminent cutoff in shipments of copiers.
I'm really upset that a lot more has been made of this than should have been," Low said. "I'm not disputing the fact that if Ricoh did stop shipments and violated its contract, that Savin and Nashua would be hurt by this. But nothing different has happened since the beginning of August."
He noted that Savin has been negotiatingwith Ricoh for 16 months, that Ricoh has continued to increase shipments of copiers to Savin each quarter during this period, and that in the talks Savin is insisting on its exclusive contract but is willing to end this arrangement five years after an agreement is reached.
"We're in negotiations - if they wanted to break the contract they would break (it)," said Low. "Both parties the typing to negotiate the best deal for their respective companies. But we have these contracts, and our attorneys say these contracts are good."
In recent years, Savin has been one of the stock market's most brilliant perfomers, rising from a low of $2 a share in 1975 to a high of $50 earlier this year.