Until a week ago, ePlus Inc. of Herndon was a nice, profitable little company that was diligently minding its own business, methodically reinventing its computer leasing operations and lamenting a profile so low that on many days its stock never traded at all.

Then somebody noticed. In just four days ePlus stock bolted from $9.62 1/2 a share to $27.75 at midday Tuesday before the inevitable, irresistible opportunity to make a quick profit triggered selling.

The stock pulled back to $23 by the end of Tuesday's trading session and lost an additional 25 cents yesterday to close at $22.75. In the past four days, trading volume has totaled 7.5 million shares, a staggering number for a stock that only traded 2,100 shares during the whole second week of October.

Odds are against ePlus stock staying so high after such an unexpected leap, but the move has spotlighted the company's new business strategy, which is built on the concept of outsourcing corporate equipment procurement via the Internet.

"You need to continue to run the business and not get caught up" in the stock price, said founder and Chairman Phillip. G. Norton.

What's happened to the Herndon company is the latest example of how the manic end-of-the-1990s market can fuel a belated explosion of trading in a stock that had languished while the fundamentals of the business steadily improved.

The company went public at $8.75 a share in November 1996 under the name MLC Holdings Inc. Norton's plan was to build a computer leasing chain by acquiring companies in several cities. Other entrepreneurs had the same idea and when they bid up the prices of potential acquisitions, Norton refused to pay. Growth slowed. The stock languished, making it more difficult to raise additional capital for expansion.

A year ago, Thayer Capital Partners of Washington paid $10 million for a 15 percent stake in the company, pumping in capital that enabled Norton to pick up the pace and begin developing an approach to the computer leasing business.

Instead of basically acting as a banker, the company came up with an "Electronic Procurement Leasing User Services" strategy. Eliminating the need for medium-sized companies to have their own equipment purchasing department, the renamed ePlus would take over that function as an "outsourcer." It would not only provide and finance the equipment, it would use the Internet to automate the whole process of ordering, owning and replacing computers and communications gear.

The company's revenue grew 64 percent, to $194 million, in the fiscal year ended March 31, and its profit was up 24 percent, to $6.7 million (88 cents a share).

In its first financial report after its Nov. 1 name change, ePlus on Nov. 15 said it had posted another 45 percent gain in revenue for the previous six months, to $115.6 million, and had a 16 percent increase in earnings, to $3.6 million. The market's response: the stock went up 19 cents.

But some technology investors started buying the stock a couple of months ago, encouraged by two acquisitions that improved earnings, said Robert Schwartzberg of Friedman, Billings, Ramsey, the Arlington investment firm that managed the company's IPO and is still the only one following the stock.

It didn't take long for buyers to soak up the small amount of stock that was actively traded and when that was gone, the price started to rise, triggering a familiar pattern: Day traders saw the move and jumped on the stock, driving it higher. That brought in short sellers, who gambled the stock would fall by selling borrowed shares. When the stock kept rising, the short sellers were forced to buy back shares to cover their losses, which drove the stock even higher.


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