There may be some light at the end of the tunnel at C3 Inc., a computer systems company that is beginning to emerge from the morass of a lengthy takeover battle.

Part of C3's turnaround is because of the stepped-up demands by the U.S. Marines and the U.S. Navy for equipment the services need to carry out their Operation Desert Shield assignments in the Persian Gulf.

C3 is furnishing the Marines with "ruggedized" computer workstations that can function under the adverse, high-temperature conditions found in the desert. The company also is supplying the Navy with a flow of desktop tactical computers. Originally intended for shore use, the Navy computers are now being used aboard ship for the Navy's interdiction program in the gulf.

In both cases, the computers are being furnished under multi-million dollar contracts that C3 already had under way with the military. But when the United States moved into the gulf and the military asked for more equipment, C3 stepped up its production and redesigned some of the equipment to fit the military's new needs.

C3 President Anthony L. Craig, who recently accepted the challenge of leading the Herndon, Va., company to higher ground, acknowledged that the military buildup was helping C3's business recovery.

"I always say that serendipity beats good management any day," Craig quipped.

To help meet the military orders, Craig said, the company has added employees and was using more part-time help. Its backlog has jumped from $40 million when Craig arrived in July to $54 million at present.

Asked about the general slowdown in defense work that has affected many Beltway companies, Craig said the picture was somewhat brighter from where he sits.

As defense budgets tighten and the pressure mounts to reduce personnel, Craig said, he expects the military to try to bridge the gap by expanding its use of computers. This means using more computers and more sophisticated computers, he said.

Craig said this development was similar to the trend in private industry a few years ago.

The nine-month takeover battle at C3 was led by Fred Knoll of Knoll Capital Management L.P. The result was to load the company with about $80 million in debt. That was substantially reduced recently by a series of changes in the financial structure of the company and a $3 million infusion by Knoll and his investors.

The debt now stands at $25.2 million and Craig said one of his major goals is to reduce that number to zero.

C3 sales rose to $20.4 million in the second quarter ending Sept. 30. And while the company still showed an operating loss, the size of the loss was declining.

Craig, who was hired by Knoll, is a familiar figure on the Washington business scene. Craig recently served as president of GE Information Services in Rockville. After that, he went to Prime Computer in Natick, Mass., where he spent much of his time fighting a hostile takeover battle with MAI Basic Four.

Asked to compare life at C3 with his previous job, Craig replied, "Nothing in the world compares to being on the receiving end of a hostile takeover."

Fortunately, he noted, he came to C3 after the takeover struggle was over.

Craig said he finds it "much more enjoyable to have the ability to rebuild" a company.

C3 no longer has publicly traded stock, but it does have an issue of preferred shares trading on Nasdaq under the symbol CTHPP. There are 2.8 million shares outstanding.

The company recently paid a $1.23 a share dividend on its 12 percent preferred issue, payable Dec. 1 to shareholders of record on Nov. 16.

The dividends are paid in additional stock, with 0.06 of one share for each 60 cents of dividend, or about 0.1230 of one share for each $1.23. An owner of 10,000 shares thus would get another 1,230 new preferred shares as dividends.

The events at C3 apparently have given a boost to the preferred, which was trading at about $2 a year ago. Recently, the shares were trading for 44 cents bid, 63 cents asked. That moved up last week to 63 cents bid, 81 cents asked.

That doesn't sound like much but it is a 43 percent increase on the bid side, 29 percent boost on the asked side.

Of course, in this kind of thin, low-priced trading, a substantial buy or sell order can send the price reeling in either direction. And investors can expect lots of gyrations before the company completes its turnaround.

"If you're the manager of a ball club and the ball club doesn't do well, something's got to give and it's usually you," said Joseph A. Clorety III, reflecting on the decision by the Calvert Group to replace him as the portfolio manager of the Washington Area Growth Fund.

The five-year-old fund, which now has about $8 million, will henceforth be run by two Calvert executives. They are Patricia Hevner, manager of the Calvert Capital Value Fund, a growth fund, and by Reno Martini, a vice president.

Why did Calvert let Clorety go?

"The bottom line is the performance of the portfolio," said Clifton S. "Stan" Sorrell Jr., president of the Calvert Group, which is based in Bethesda. "As a management company, we just had to take action."

Under Clorety's direction, the WAG fund, as it came to be called, lost 36 percent for the first nine months of this year, 44 percent for last 12 months. Clorety's fund was hard hit by his investment in local bank and thrift stocks.

The rival fund operated by Johnston, Lemon & Co., called the Growth Fund of Washington, also lost during the same time periods, but less. The Growth Fund dropped 23 percent in the nine month period, and 28 percent in the last 12 months.

A similar fund, the Southeastern Growth Fund, run by Wheat, First Securities in Richmond, lost 20 percent in the first nine months, 27 percent during the last 12 months.

Clorety said that managing the WAG fund presented a number of difficulties, including the need to be fully invested in companies in the Washington region. "The last 18 months have been extremely difficult because it's the time when the area has been hit the hardest," he said.

Clorety, who operates his own money management firm from Gambrills, Md., now oversees the investment of about $20 million in private money and pension funds.

Calvert, which is known primarily as the home of socially responsible investing, now manages about $2.8 billion for investors.

"At these prices, I can't leave it alone," Frank M. Ewing of Chevy Chase says of the value he sees in the shares of Maryland Federal Bancorp Inc., which operates Maryland Federal Savings & Loan of Hyattsville. Ewing, who served on the board of directors for about 25 years, has kept close tabs on the thrift in which he has continued to buy stock. He left the board a decade ago.

Currently, Ewing owns 194,152 shares of the Maryland thrift, which represents a 6.3 percent stake in the company.

In September, October and November, Ewing bought 80,000 shares in the $5-to-$7 range. He says the thrift has a "hard"-book value of $18.42 per share and few troubled loans.

At 75, Ewing is retired but he was a prominent Washington businessman for many years. He founded the Ewing Lumber and Millwork Corp., was chairman of the home-building firm Kettler Brothers and served on the board of Washington Gas Light Co.

Takeovers, turnarounds and short-selling will be the main investment themes of a new money management firm being opened by Daniel H. Abramowitz, who has been managing money for Sidney J. Brown, head of Beltway Plaza Developers in Beltsville. Abramowitz' new firm will be called Hillson Financial Management Inc. Abramowitz said he will continue to manage Brown's money in his new firm and hopes to attract money from wealthy individuals who are willing to take somewhat higher risks to achieve higher returns.endquad