Christmas shoppers are bringing cheer to the folks at Black & Decker, snapping up their Dustbusters as fast as the company can ship them. Sales of the portable vacuum cleaner -- and other Black & Decker products -- are being watched eagerly by stock analysts for clues to the financial health of the company.
Future Christmas seasons, however, may find analysts also keeping an eye on the sale of Black & Decker toasters, coffee makers, can openers and a variety of household products that until recently were manufactured by the small appliances division of General Electric Co. As part of GE, the division had annual sales of about $473 million.
Earlier this year, Black & Decker, one of the world's leading manufacturers of power tools, acquired GE's housewares operations for about $300 million. The agreement allowed Black & Decker to use the GE label for three years -- meaning that it had three years not only to change the labels but three years to convert public buying habits.
The big question, said Kidder, Peabody & Co. analyst Stephen J. Albert, is whether people will buy a Black & Decker toaster with the same enthusiasm that they bought General Electric toasters in the past. "There's a good chance that they will," he said.
This relatively new wrinkle in Black & Decker operations is the subject of speculation not only from Wall Street analysts, but also from investors who consider Black & Decker one of the more interesting Washington-area stocks of the future. Since September, the stock of the Towson, Md., company has drifted between $19 and $23, closing Friday at $22.
Looking down the road, Franklin Morton, who follows Black & Decker for Alex. Brown & Sons, believes that the acquisition of the GE division takes Black & Decker "from a smaller player with a limited product line in the houseware areas to a market leadership position" that would have been difficult for the the company to achieve otherwise.
Morton said he is not looking "for any immediate gains in the stock" but says that "longer-term holders of Black & Decker shares should be well-rewarded." Morton believes that one of the reasons the price of the stock is being held back is uncertainty in the market over how smoothly Black & Decker will make the brand-name transition.
Dean Witter analyst Joel Krasner is optimistic about the stock, which he expects to reach $30 a share.
Krasner predicted that, whether the firm succeeds or fails, Black & Decker is bound to become a "textbook classic case" for its efforts toshift consumers to the Black & Decker label. "It's the biggest challenge they have ever faced," he said.
David Schaufele, director of investor relations for Black & Decker, said the company will soon begin a $100 million advertising campaign lasting 18 months. The first target, he said, will be the GE Spacemaker line, to be marketed as the Black & Decker Spacemaker line. It includes under-the-cabinet can openers, coffee makers and toaster ovens. One of the reasons Black & Decker executives hope for success, Schaufele said, is the research they did before they acquired the GE products. They found that many of their power tools were being bought by women. If women will buy Black & Decker electric drills, they reason, they also will buy Black & Decker toasters and can openers.
Alan S. Parsow, 34, the Nebraska investor who recently bought a 5.3 percent stake in Evaluation Research Corp., a Northern Virginia high-tech firm, has raised his holdings to 6.5 percent by buying another 35,200 shares for between $4.50 and $5.35 a share.
Parsow, who runs a $23.25 million limited partnership investment fund, now owns a total of 193,000 shares in Evaluation Research, which provides computer, engineering and management services to government and industry. The young investor, who got a very chilly reception from ERC management when he asked for a seat on the board of directors, may yet get that seat.
ERC President Jack Aalseth, who was wary of Parsow, said this week that he was "much more comfortable" after looking at a list of about 75 investors in Parsow's fund, a list he obtained from the Nebraska secretary of state's office. "It doesn't look like any predatory group," Aalseth said. Indeed, Parsow's list contains several individuals and institutions with investments of between $1.6 and $3.2 million. Aalseth says he now plans to take a serious look at Parsow and "if he checks out, and if it looks like he'd be an asset, he'd be more than welcome."
What is Parsow's feeling about the stock? "I wouldn't be buying if I didn't feel there was value there," he said, indicating that he is prepared to buy more if the stock is available at the right price. Of his fund, Parsow said, a $1 investment in 1975 would have been worth $7.25 as of the end of October.
The initial offering of stock in British Telecommunications PLC, the British telephone company, brought smiles to the faces of Prudential-Bache and Merrill Lynch brokers in the Washington metropolitan area. "It was a real hot deal, one of the few we've had this year," chortled Carole Rollinson, manager of Prudential-Bache's Bethesda office. Customers were lined up for the shares -- called American Depository Receipts -- and brokers couldn't fill all the orders. Dave Lefeve, head of Merrill's Connecticut Avenue office, noted that his national firm got only 800,000 shares to distribute among 500 offices -- making it hard to meet the demand. Those who got the ADRs, issued at $5.96, saw the price go to $11 on the first day of trading, giving ample opportunity for profit-taking. The stock closed at $12 on Friday.
Getting lucky or just good timing. Call it what you will, but Legg Mason analyst Anthony Pearce-Batten put out an "okay to sell" signal on Union Carbide stock on Oct. 19 -- six weeks before the accident in India that sent Union Carbide stock plummeting. Pearce-Batten's reasons for changing his view on the stock were mostly technical ones. He thought that, in a cyclical business, Union Carbide's results had peaked and that, at $50.50 a share, the stock was fully valued.
Even so, the call may have been fortuitous for the Legg Mason Value Trust, which held 12,000 shares of Union Carbide. Although recent changes in the Value Trust holdings won't be published until the end of the year, it would not be surprising to find that, as in the past, the Trust had followed the advice of its research department and dumped the stock.
T. Rowe Price, the $9 billion mutual fund firm from Baltimore, has joined hands with Coldwell Banker, which handled $28 billion in real estate transactions in 1983, to create a $100 million real estate limited partnership called T. Rowe Price Realty Income Income Fund I. Because the partnership does not make a sales charge, a spokesman says, acquisition and organizational costs to the investor are expected to be only about 10 percent instead of the average of 20 percent paid by investors in other partnerships. The difference is the omission of the front-end commission, which generally runs around 8 1/2 percent. The firm says the fund provides "the potential for attractive returns, steady cash flow, a hedge against inflation, and some degree of tax shelter."