Fort Worth Star-Telegram from Fort Worth, Texas • 61

Section Page 2 I Star-Telegram Friday June 7 1996 Presstek stock plunges as promoter discloses SEC inquiry: 1 I "The bubble is bursting" said Kemp Fuller an analyst with LT Lawrence Co in New York who once wrote research reports on Presstek's behalf "This stock had its ride and now it's coming to an end" patented process to scan printing images directly by computer onto plates mounted in presses This-bypasses the traditional develok ing process in which images musk be developed on the plates usirT an expensive time-consuming and' messy chemical process similar to developing a photograph It earned $2 million during the first quarter of 1996 up from $160000 during the first quarter of 1995 Ul 177J company based on recommendations from newsletter writers and others who stand to profit if the price rises Lutts and his son Robert who runs Cabot Money Management a money management firm in Salem Mass have long been among Presstek's most fervent proponents "We believe this stock can increase in value 20-fold 30-fold or even more" the elder Lutts wrote in April 1995 "We also believe this stock will make you rich if you are just patient enough to let it happen" The newsletter named Presstek its stock of the month on four occasions predicting that the company's printing technology will revolutionize midsize printing jobs It urged subscribers to purchase the stock even as it rose Robert Lutts said Presstek is the single largest holding among the funds' 1200 clients Several clients have more than 3 percent of their portfolio in the stock and at least one has more than 40 percent of its total holdings Lutts said Presstek manufactures printing press technology that allows images to be scanned directly from computer onto printing plates removing the need for costly and messy chemical development The company developed a BIOOMberg BUSIFICSS News HUDSON NH Presstek Inc shares plummeted 29 percent after one of the stock's promoters disclosed that government regulators are investigating his recommendations and investments in the Company Carlton Lutts editor of the Cabot Market Letter sent a letter to subscribers saying that the Securities and Exchange Commission is looking into its relationship with the Hudson NH-based press manufacturer of our high visibility 'in this stock due to our repeated buy recommendations for a full iwo years the SEC has asked us for documents including sources SEC could finish Nasdaq "They're going to be a major company in a couple of years'" the younger Lutts said last week "It's as if someone developed a new brand of gasoline and Genet: al Motors said they will build the' engines" The Associated Press f--10 IL 1 r----we 77-7 -r-- 1)i i-----1 gr 4p 4'1--r-- -N I -It IliiiIiiicap-1 I et i it tri 1 if-r' t4 4 l' ''Pli 1' sr 1 Ie' 4 dii 41 4 I this summer than against the NASD's regulatory activities Sources declined to speculate about what penalty if any the SEC might bring against the NASD "The SEC can do whatever it wants to do on this one" one source said The NASD has enacted several major revisions based on a study produced by former Sen Warren Rudman R-N1-1 It brought in a respected regulator former SEC Commissioner and Commodity Futures Trading Commission Chairwoman Mary Schapiro to lead a revamped regulatory arm and appointed a new board of directors to oversee the policing unit Schapiro announced plans last month to spend several million dollars to hire 131 new staff members including attorneys and examiners Levitt believes the NASD has made constructive changes especially with its new boards of directors SEC spokesman Michael Jones said NASD spokesman Marc Beauchamp declined to comment on the SEC investigation The Associated Press WASHINGTON The Securities and Exchange Commission's investigation of the Nasdaq Stock Market and its parent company could be concluded by the end of the summer officials said yesterday Outcome of the case remains in question as SEC's enforcement staff considers its findings and -continues negotiations with the National Association of Securities Dealers a self-policing organizafion that supervises 513000 and owns Nasdaq A spokesman for SEC Chair: Arthur Levitt said the top regulator would be if the agency's investigation isn't wrapped up by the end August Levitt was traveling and couldn't be reached for corn: ment William McLucas the SEC's director said of an August deadline "It's certainly a reasonable expectation" The SEC's investigation began in November 1994 after the Jus tice Department opened an investigation of the possiblity of collusion in the over-the-counter stock I 1 1 A money dealer shouts to bid an order as an electric board flashes the Japanese-US currency rate at 10930 yen to the dollar yesterday on the Tokyo Foreign Exchange Markets The dollar gained against the Japanese yen for the third consecutive day ranging from 109 yen to 10950 yen of our information on Presstek" Lutts wrote in the letter to his 25000 subscribers Eight other stocks that the Cabot letter recommended ranging from Netscape Communications Corp to America Online Inc and 'omega Corp also fell yesterday after the disclosure They tumbled as much as 20 percent Presstek's shares fell $3150 to close at $7750 and traded as low as $60 The stock had peaked at 200 on May 21 and its two-week plunge coming amid filings that company insiders were selling shares erased more than $2 billion of its market value market which includes Nasdaq The SEC's broad investigation encompasses not only allegations of a form of price fixing but also the NASD's policing of the market and handling of customer stock orders The government investigations were partly driven by academic studies that show the gap between the purchase and sale price of Nasdaq-listed stocks to be much wider than that of comparable stocks listed on the New York Stock Exchange That price gap known as the "spread" represents a major portion of the dealers' profit Critics argue that dealers want to keep spreads wide to make more money on trades The dealers and Nasdaq officials strongly deny the charges They defend the market as highly competitive and say the bigger price gap results from Nasdaq's different market structure In September the SEC unveiled a major rule proposal that would alter the handling of Nasdaq customer orders requiring customers' limit orders to be included in the prices quoted on Nasdaq or other exchanges "These local community hospitals should be providing services that fit the needs of the community That should be their overriding goal" Mary Gabay study co-author unnecessary Caesarean sections he said At the same time consumers lose the opportunity to have their concerns heard "The governance instead of being local is thousands of miles away in a boardroom and the allegiance legally is to the stockholders" Wolfe said Public Citizen is raising the right issues although the problems have not reached a crisis point said Rick Wade senior vice president for communications at the American Hospital Association Wade said that although some for-profit hospitals don't do community outreach and charity work others do "It's very difficult to generalize these things as risky for consumers" Wade said "There have been certain cases where not-forprofit hospitals behave in ways that would look like an investor-owned" hospital recalling pacifiers The SEC declined to comment on Presstek Lutts said in his letter that he has complied with all the agency's requests and that he has done nothing wrong He could not be reached for comment Calls to Presstek's founder Robert Howard and a company spokeswoman Jennifer McKay Tardif weren't returned The stock's plunge highlights the dangers of buying shares of a investigation "The SEC can do whatever it wants to do on this one" Unidentified source A limit order is an investor's request to buy or sell stocks at a specific price not just the going market price The SEC argues that including limit orders within Nasdaq quotes could narrow the spread between the purchase and sale prices of a stock Another proposal would open up dealings on private computerized trading networks where many Nasdaq stocks are bought and sold One source said on condition of anonymity that it is unclear if these rules and any enforcement action against the NASD's regulatory activities would be wrapped up at the same time "There's some logic to doing them at the same time" the source said Another source said the SEC has a better case concerning the order handling on Nasdaq rather The wave of mergers and buyouts is driven by excess hospital beds in communities across the country he said To be efficient some must be eliminated Wolfe agreed that some mergers may be in the best interest of the community but he suggested that more public input is needed before mergers and buyouts are approved He proposed mandatory public notice and hearings Wade responded that public input is good but that the government should not mandate it "We'd like to see voluntary public input" he said Although 85 percent of the nation's hospitals remain nonprofit the consolidation trend is likely to continue for the next four years with for-profit companies responsible for some of the consolidating said Stephen Shortell professor of health services management at JL Kellogg Graduate School of Management at Northwestern University The record of for-profit hospitals is inconclusive but Shorten said he worries about the future when programs that aren't making money in the short run may be eliminated and charity efforts may cut back "I think it's a question mark because obviously they have to pay attention to the bottom line and the stockholder" he said "Could it be harmful? Yes Yes it could be" safety panel says USINESS Digest Wave of hospital mergers threatens services local control advocates say The Associated Press WASHINGTON Merger mania among hospitals is jeopardizing important community services and local input an advocacy group said yesterday Particularly worrisome is a toward for-profit institutions nonprofit hospitals Citizen's Health Research said "Something needs to be done to wrench the power from these huge corporations that seem to be buying up the hospitals in this country" said Dr Sidney Wolfe the group's director "There's real ly a disease of medical monopoly going on" Public Citizen documented 447 buyouts mergers and acquisitions of hospitals in 1995 That includ: ed 58 nonprofit hospitals that were or will be converted into for-profit operations "These local community hospitals should be providing services that fit the needs of the community That should be their overriding goal" said Mary Gabay co-author of the study "It's unclear when a for-profit chain comes to town what their bottom-line goals are" Wolfe conceded that there is no conclusive evidence of the overall effect of for-profit companies but he cited several clear risks These include restriction of extra services like AIDS care burn and trauma centers emergency care for the indigent and higher rates of Fort Worth firm Mortgage rates highest in year WASHINGTON Thirty-year fixed-rate mortgages averaged 830 percent this week the highest rate in more than a year according to a national survey released yesterday by the Federal Home Loan Mortgage Corp The average up from 803 percent last week is the highest since the average was 837 percent during the week ended April 13 1995 On one-year adjustable rate mortgages lenders were asking an average initial rate of 586 percent up from 576 percent last week Fifteen-year mortgages a popular option for those refinancing mortgages averaged 780 percent this week up from 754 percent a week earlier The rates do not include add-on fees known as points New York exchange names leader NEW YORK The New York Stock Exchange yesterday named William Johnson a 32-year Big Board veteran as its new president and chief operating officer Johnson 56 replaces Richard A Grasso who was promoted to chairman and chief executive last June Johnson takes over July 1 Johnson a member of the exchange since 1964 was vice chairman and a director of the Big Board He has also been a senior managing director of LaBranche Co a leading specialist firm The exchange also elected three new directors to its 25-member board: Alex Trotman chief executive of Ford Motor Co Maurice Greenberg chief executive of American International Group and Richard Fuld Jr chief executive of Lehman Brothers Holdings National Semiconductor sales down SANTA CLARA Calif Decreased sales and costs associated with recent layoffs drove National Semiconductor Inc's fiscal fourth-quarter profit down 88 percent the company said yesterday National Semiconductor earned $91 million or 7 cents per share in the quarter that ended May 29 It earned $812 million or 62 cents per share during the same quarter last year Sales were $6124 million down from $6698 million a year ago Nabisco buys assets of Taiwan firm PARSIPPANY NJ Nabisco Holdings Corp said yesterday that it acquired the biscuit confectionery and snack food assets of Lucky Enterprises Corp of Taiwan for an undisclosed price Nabisco Taiwan Corp a new unit will manufacture and market Lucky brands and products under the Nabisco trademark Lucky's parent company Namchow Chemical Industrial Co will handle sales and distribution in Taiwan Lucky Enterprises had fiscal 1995 sales of $47 million Centex vice chairman elected DALLAS Centex Corp announced today that David Quinn has been elected vice chairman of the company's board of directors The company said that the election reflected Quinn's substantial continuing contributions to Centex Quinn 54 joined Centex in 1987 as its executive vice president and chief financial officer and was elected to the Centex board in 1989 He will continue as Centex's chief financial officer Specialty retains Merrill Lynch ROSEMONT Ill Specialty Foods Corp announced yesterday that it has retained Merrill Lynch Co to advise it on the potential sale of certain of its noncore businesses according to Paul Liska president and chief executive of Specialty Foods Corporation He said the companies targeted for possible sale through Merrill Lynch are Mother's Cake Cookie Co Foods Inc Burns Ricker Inc and San Francisco French Bread Company "During the past two years we have upgraded management and realized cost-saving opportunities throughout all of our businesses" Liska said "Now the time has come for us to concentrate our efforts on our core bakery and cheese operations" Bias suit filed against West DENVER The National Black Chamber of Commerce filed a lawsuit yesterday against West Inc claiming the company discriminated against black-owned companies trying to get contracts in its 14-state region The lawsuit filed in US District Court in Denver seeks $150 million in damages Attorneys for the chamber claim in the lawsuit that West "knowingly and deliberately" excluded African-American businesses from its procurement contract program for companies owned by women and ethnic minorities The chamber alleges that West's total procurement expenditures in 1995 were approximately $43 billion of which minority businesses received less than 3 percent and black-owned companies received less than 1 percent After a news conference outside company headquarters in downtown Denver West spokesman Jeff Garrett called the lawsuit "frivolous" "Clearly what makes this tactic so offensive is that West is a national leader in affirmative action and doing business with minority businesses We feel it's an insult without merit" Garrett said No response for rail track offer Union Pacific Corp said yesterday that it still has no response to an increased offer by Conrail for track owned by Southern Pacific Transportation Co in Texas and the Midwest Conrail said Wednesday that it would increase a previous $15 billion offer to $19 billion for Southern Pacific's track from Chicago to Brownsville Union Pacific has applied to merge with Southern Pacific in a deal whose fate will be decided by federal regulators next month The Associated Press WASHINGTON A Fort Worth company is voluntarily recalling about 10000 pacifiers that can break apart releasing small parts that present a choking hazard to young children the US Consumer Product Safety Commission said yesterday Lerma Import of Fort Worth is recalling the product that it imported from Mexico in cooperation with the Consumer Product Safety Commission which had asked that the step be taken to prevent possible injury A person who said he was Lerma's sole employee said yesterday that the company would not comment on the recall The commission and Lerma Import aren't aware of any injuries associated with the pacifiers the Imissiont said The pacifiers measuring 3 inches long and approximately 112 inches across the base are blue or white plastic with a yellow nipple filled with a sugary substance They have a circular handle and a shield labeled "Jaloma" the commission said The pacifiers are packaged in individual cellophane bags displayed on a cardboard header labeled in part "NUEVO CHUPON NEW PACIFIER HECHO en MEXICO Laboratories Jaloma SA de CV Aguiles Serdan 438 Guadalajara 44380 Ja Retail stores in Dallas sold the pacifiers from May 1995 to May 1996 Each costs 25 cents the commission said Consumers should return the pacifiers to the stores where purchased for a full refund For more information call Lerma Import at (8171) 624-3404 I.