The Los Angeles Times from Los Angeles, California on January 28, 1969 · 39
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The Los Angeles Times from Los Angeles, California · 39

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Tuesday, January 28, 1969
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39
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INSIDE THE MARKET Has Armour Too Much Fat for Sleek Greyhound? of . ' TlmH Stiff Writ Bosfed Resians Market Puts on Drab STARDUST as President ShoW; Dow 30 Off 1.12 BY ERNEST A. SCHONBERGER, Times Staff Writer ' And now Armour & Co. seems to want to leave the driving to Greyhound. At any rate, the Chicago-based meat packer, the nation's second largest, has been fighting off General Host's bid for its stock and Monday indicated it is heading for Greyhound's protective cover. Greyhound has bid $65 a share for Armour. And the question is why does the bus company or any company want Armour in the first place? According to Wall Street sources, Armour has one of the worst profit margins in all industry. They claim that only its fellow packer, Swift & Co., has a poorer bottom line among major firms. For example, in 1967, Armour netted only $22.2 million on sales of more than $2.1 billion a profit margin of about 1. In some years the margin has been considerably below 1. There are scores of companies with sales barely over $100 million that earn almost as much as the $13 to $15 million annual net Armour posted during many years in the 1960s. The answer in investing circles is, essentially, that Greyhound or someone will make some prime profits from that hefty flow of cash through the packer's till. Profits Coming Two Ways And they see this coming in two ways: a better profit on the meat operations, and a redeployment of some of Armour's resources into growth industries with better margins. Armour has already made some moves to improve its earnings. It has diversified in consumer products, notably its Dial soap. And it acquired Baldwin, Lima, Hamilton a heavy equipment manufacturer noted for its locomotives way back but now a growing factor in water pollution controls. But, as analysts see it, the meat packer has plenty of room to diversify further. As to potential for improvement through internal development, Marjorie Fisher, a portfolio manager for American Mutual Fund and a longtime meat packer analyst, puts it this way: "If they raise the after-tax margin just to Vi, it's very attractive." That would add about $11 million yearly to profits or almost $2 a share. The company's profits have ranged between $2.26 and $3.72 per share through the 1960s, with $2.67 in 1967, the last full year reported. - Without trying to paint a picture for or against current purchase of Armour 6tock, now that it's trading close to the $65 Greyhound offer price, Miss Fisher says there's little doubt but that Armour will be taken over by someone. Acquisition of meat packers isn't a brand new idea. The aggressive Ling- Temco-Vought started the ball rolling several years back by buying Wilson & Co., "one of the best major packers for profit consciousness," according to Miss Fisher. "Morrell was then acquired by AMK and various passes have been made at Swift . . . including by Hunt Foods (the forerunner of Norton Simon Inc.)" "The whole industry has been sort of gobbled up," she phrased it without intending the pun. She notes American Mutual Fund, which Vickers Guide lists as holding 60,000 Armour shares, bought the bulk of its position in 1966. So did Investment Co. of America, a companion fund of American Mutual, with 120,000 shares at last report. She says she had thought for several years that key fundamental changes were taking place at Armour "and the overall picture became obvious when it got rid of its fertilizer operation ... I don't think it ever made money." The fertilizer business was sold to U.S. Steel at the start of 1968. Armour Called 'Sleeping Giant' Thomas Williams, portfolio director of Chicago-based Technology Fund, says his company's 143,700-share position the biggest holding of any mutual fund at last report was taken in the wake of the Wilson and Morrell takeovers. He said he looked upon Armour as a sleeping giant, noting that Armour management was beginning to indicate it might "do something with the vast resources it had." This meant that even if no one tendered for Armour, there was the possibility of improvement from within. How about Swift & Co.? "They're still asleep, as far as we're concerned," said Williams. Would Greyhound fit well with Armour in the event a merger goes that way? Greyhound Becoming Conglomerate Replies Phillip Mullenbach, president of Growth Industry Shares Inc. of Chicago, one of the funds holding a block of Greyhound: "We don't know the motivation of Greyhound as to Armour. But the recent history of Greyhound indicates it's moving in new directions. Divisions other than bus operations have been growing nicely." He said Greyhound has been "progressively" becoming a conglomerate, diversifying into growth industries because its transportation growth is quite moderate, "more or less tied to the gross national product." But it won't earn the title of the swinging conglomerate of 1969, he declares. . ELECTRONIC FIRMS Continued from 9th Page Western Electronic Manufacturers Assn. Another panel member, President John F. Bishop of Dana Laboratories Inc., Newport Beach, told of start-v ing his firm on a somewhat longer shoestring than that enjoyed by Kil-patrick's group. Beginning as joint owner of a consulting compa-ny, Bishop was approached by two engineers with an idea for an improved digital voltmeter. He , looked at the market and realized that most of the products already there were considered unsatisfactory by t h e i r users. Bishop saw the opportunity that awaited a reliable product, and obtained capital from his own firm and from E.I. DuPont de Nemours, one of the firm's clients. DuPont invested In the new company' c o n v ertible debentures and later converted them for a 40 interest in Dana. "Our major failure at the beginning was our unwillingness to place enough confidence in our own plans and projections," Bishop said. "We correctly predicted that the market was going to grow strongly, but we lost opportunities for bigger profits because we didn't trust our projections enough." Branch Bank OKd Centinela Valley Bank, headquartered in Ingle-wood, has been granted permission by the State Banking Department to open a branch office in Newport Beach. GETZE Nelson P. Bosted, pres-. ident of International Rectifier Corp., Los Angeles, said Monday he has resigned due to "irreconcilable differences concerning the future course of action in the pharmaceutical operations." He was named president last May. At the same time Inter-national Rectifier announced a drop in net income for the second fiscal quarter of 1968. This reflects the continuing problems in the firm's pharmaceutical group, said Eric Lidow, chairman of the board and chief executive officer. Lidow will assume the post of president, a position he held up until ; Bosted's appointment last year. Angus A. Scott has been named executive vice president and will have responsibility for domestic pharma ceutical operations. Harry A. Cohen has been named vice president-finance and will continue' as treasurer. Net-Income Dips For the three months ended Dec. 29, 1968, IR reported net income of $52,050 or 2 cents a share on sales of $9,421,062. This compares with a net of $61,651 or 2 cents a share on sales of $8,299,129 for the three months ended Dec. 31, 1967. Net income for the current quarter includes a special gain of $23,000. For the six month period ended Dec. 29, 1968, net income totaled $123,150 or 5 cents a share, compared with $436,814 or 16 cents a share in the year-ago period. Sales were $17,909,325 as against $16,149,532 in the first half of fiscal 1967. Lidow stated that losses incurred by the firm's pharmaceutical group continued to subtract from profits. He added that intensive attention would be placed on drug operations during the second half of the current fiscal year. Results for the previous fiscal periods have been restated to reflect the acquisition of what is now the industrial measurements & controls division on a pooling of interest basis. Axe Houghton ! Fund B. Ina J5b boSi current fences? find long tsrm growth- possibftIgf&9 To: Any Seeeriaee Corp, 6404 WltaMra Ivd, Loo Angelee, Col. 90048. "leeee tpugnton Pond m, '.tAT-10 AMrou. CHytSMo. The merger into THE FLUOR CORPORATION, LTD PIKEfCORPORATION OF AMERICA became ttfecHv$ January 2,1969 The undersigned originated and asttetd in the negotiation in connection with Qui transaction. NEW - YORK The stock market put on another drab Monday performance, closing mixed with softness in blue chips de-p r e s sing industrial in-dexes. Trading was moderate. . ' Volume was 11.02 million shares, compared with 12.52 million Friday, The Dow Jones industrial average, which showed . a slight gain at the start, ended with a loss of 1.12 at 937.47. Broader indexes did better, some showing plus signs. "Analysis saw the market as putting on a typical Monday performance when the major . trend is down, even though it is interrupted ' occasionally by technical rallies. , . Some Wall Street obser-. vers envisioned the market as making a desultory, drifting pattern for a couple of months, possibly until the effects of the government's anti-inflation drive become clearer. Some Hesitation The day's . session was marked by some hesitation at about the time President Nixon's first news conference got under way, as the Street was not sure what to expect. Later, when the nature of his remarks become known, there was no apparent effect on stock prices. The decision of Chrysler to cut back auto production in .February was depressing, however, because Wall Street never likes to hear that kind of news from a major automaker. Chrysler was down VA at 5134. General Motors, which said it had no present plans to reduce Its cs e output for February, remained fractionally higher for a while but softened . later and took a loss of Y at 78. . " : Airlines were scrambled on news that President Nixon had rescinded President Johnson's decisions ; on the transpacific route awards. , . Continental Air. Lines, which was granted an international transpacific route for the. first time under the Johnson award, was apparently fearful of losing it. Continental was the most active . stock among the airlines, losing PAat 21.. Among other airlines, Eastern gained 13A, American lost , Pan American gained Vx and United dropped Of 1,556 issues traded, 667, rose and 641 fell. New highs for 1968-69 totaled 30 and new lows 8. Pennzoil Drops Offer Pennzoil was the most active stock, off 3A at 54V& on 326,200 shares. Pennzoil was ordered in federal court to suspend its tender for American Smelting stock until the court could decide whether a merger of the companies would, violate the Clayton Act. After the close, Pennzoil said that in view of the legal situation it would terminate the offer for Asarco. Asarco opened late on a block of 42,100 shares, down 10 at 87, but recovered partially to close at 90, off 7 points. Standard & Poor's 500-stock index rose 0.02 to 120.40. The New York Stock Exchange index closed unchanged at $58.10. Wliiiiis a Research (oratte a ait A tl S wmim 9 miistant service0 Glore Forgan, Wm. ILStaats Inc. . I II TUi idmHimenttppemm 4 mttlerefreeedMlj, and nt public offering'' , is beinguude of these Notes. ' NEW ISSUE ' '-J: ; ' i;" .; -': January 28, 19 : 3,000,000 : 6Vi Senior Notes due 1980 II withrarraati to purchase Common Stock " ' This finMcinghas been arranged privately through the undersigned. " First California Company Merrill Lynch, Pierce, Fenner & Smith : ' Icrpn4 I rpQMfd LtelVT Many investors think NT -Investment Values for Today -is the name of our comprehensive Research quarterly. They are partly right But rVT te much more than stock recommendations, industry surveys and an economic and market outlook. Its a continual service. New everyday. Sometimes new every hour. Because securities values change, and we want our clients to be up on significant changes. " So we continuously uDdate our analysis of the economic climate,' reappraise develop-, ments in maior indus tries, add or delete IVTi stocks as relative vak ues change. ' And we speed this information via our private newswire to all of our 110 offices in the U.SCanada and abroad. ' So don't think of IVT as something that comes out once a quarter. It's a programmed Research service that, almost never stops, i ." ffl FRANCIS L duPONT & CO. OMR 1K OWICf t THf CAWAOA ANO ABIWAO. MEMBERS M.J. iVxCMANtit PMMClPAl SECOrr AND COMMODITY EXCHANGER AOitlNimWTIWOrrOWf ; tOS ANGELES, 800 Wilshir Blvd. ' 900 V7 Tel: 629-1388 BAKERSFIELD, 1713 Chester Avenue, 93301 Telt 323-6081 BEVERLY HILLS, 166 N. Canon Drive, 90210 Tel: 273-21 1 1 Continued from 9th Page Strip and has arranged to buy a sixth, the Landmark tower structure, which has not opened. Parvin-Dohrmann currently owns two hotel-casinos, the Fremont and the Aladdin. The 1,476-room Stardust long ha3 been the biggest moneymaker on the Las Vegas Strip. Parvin-Dohrmann recently underwent a change in top management, with the sale of control by Albert Parvin, former president, and Harry A. Goldman, former chairman. Delbert W. Coleman, president of Seeburg Corp., bought 25 of Parvin -Dohrmann's stock Tue5.,Jan.23,1969-PartUI from the two former officers and became chairman and chief executive officer on Jan. 13. William Scott, former partner in Arthur Andersen & Co., became president . " Bank Debits TM Let Anelt Otartnthous Attn, rtportt Monday debits. S1)l 1.100131; cer miMndinf datt last year, $71B,7M,M4. sen Franciico ciearinn, YXIMhMto. MFGR.BUS. OWNER ADV.-PUB. REL. COUNSEL available by Top Talent Team (alio prepare House Organ, Press ',' Releases, Speeches, Sales Promotion) MOONLIGHT P.O. BOX 1861 Clendale, Calif. 91209 t success is our business. Reynolds is a weekly report called "Market Opinion" It's time stamped every Friday at 9 AM when Leslie Pollack, our Partner in charge of Research, is satisfied that it says exactly what he wants it to say. Because thousands of our customers make it must reading Monday morning . . . Because as Director of Research, he has earned a reputation and following he wouldn't jeopardize for the world. The Report isn't too long runs maybe fifteen hundred words, f But those fifteen hun- dred words are extremely readable, penetrating and ' provocative-Pollack's ' own ideas, his own unique blend of technical and fundamental analysis on just what happened last week ; in the market-and just whattolookfornow. If you'd like to see a sample of the kind of help Reynolds' customers can count on, we'll be happy , to mail the next two or three issues of Leslie Pollack's Weekly Report. No charge, of course.1 Simply mail us the coupon below. Please send me 2 or S complimentary copies of your MARKET OPINION. Name Address Ciqr State Zip i Telephone- r Reynolds & Cb. MUtEMmv rone steer neiMin and own lucixa bomngci ISO SOUTH SPRING STREET. LOS ANGELES. CAL50OTJ Telephone): MA 6-4211 We take pleasure in announcing: the appointment of CAMRON COOPER as Director of Research Lester, Rydns SL Co, Serving Investors Since 1912 MEMBERS NEW YORK STOCK EXCHANGE Pacific Coast Stock Exchanga American Stock Exchange 623 South Hope Street Los Angeles, California 90017 Telephone: (213) 625-711 1 CORONA DEL MAR ENCINO GLEN DALE HOLLYWOOD LONG REACH OCEAN SIDE PASADENA POMONA REOLANDS LOS ANGELES RIVERSIDE SAN DIEGO SANTA ANA SANTA MONICA WHtTTlER Suppose the blind men in die fable had talked to each other? ; . Then they wouldn't have been confused as to what the sum total of the various parts of an elephant add up to. To avoid that kind of mistake, we have our . regional security analysts (located in Los Angeles, ' San Francisco, Chicago, and New York) meet once a 1 month to exchange information and viewpoints. This i; national plus regional method of security analysis, we believe, results in unusually sound investment rec- ; ommendations. : - ; If national d!us regional research makes sense to you, shouldn't J Glore Forgan, Wm. R. Staats inc. . j v , bevour broker? Loa Angelts 90014 - 640 South Spring St., MA 9-4488 Beverly HlllaJ 90212 - 9750 Wllshlra Blvd., CR 4-8751 Orange 82863 - 30 Union Bank Sq., Kl 7-77S1 Patadena 91101 - 808 E. Green St., SY 3-7154 Redlanda S2373 - 2 Redlanda Plaza, 793-2621 8herman Oaka 91403-50 Fathlon, Square, 872-2330 ! . ' SAN DIEGO SAN FRANCISCO PHOENIX CHICAGO BOSTON NEW YORK

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