BUSINESS U to a New Life Bow to Canard to Harry Gray Martronics: Too Good to Be True?
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20 - MANCHESTER HERALD, Fri., Feb. 11, 1983 Cher's on path M H S girls A n open letter BUSINESS u to a new life bow to Canard to Harry Gray Martronics: too good to be true? ... page 11 ... p age 15 ... page 6 "An out-and-out stock rig," says one market , BUT THAT was yesterday. Today, there’s a glut of driving the stock price higher and (3) to allow th» skeptic. video game machines. Industry sales have leveled off insiders to get out at a better price. Harsh words, indeed, but then again the market sharply (just ask the folks at Warner Communica Speaking of the insiders, boy are they ever luckjC heroics of mighty MorTronics, a hot little number on Dan Dorfm an tions) : weekly gross receipts of coin-operated video The higher the average weekly training volume la Clearing today, Manchester, Conn. the American Stock Exchange, raise all sorts of game machines are off more than 20 percent. Reports MorTronics shares, the more stock they can sell. And intriguing questions. > 9 i have it that manufacturers are selling off relatively now, just when they can unload some stock, tbd windy Sunday Saturday, Feb. 12, 1983 i Imagine, if you will, the following; Syndicated new coin-operated video games at big discounts. And trading volume has suddenly skyrocketed, rising tq • The company's chief business — the distribution of nearly 388,000 shares last week from between roughly — See page 2 Single copy 25(f Columnist some distributors have even brought in auctioneers to coin-operated video game machines — is beset by help them reduce their huge inventories, reports Play 34,000 and 64,000 the previous three weeks. Z rapidly mounting industry problems. Meter magazine, a biweekly for the coin-operated Of the 5.1 million MorTronics sharqa, nearly halt ' One of its biggest stockholders openly admits the industry.. are held by insiders and maybe another 1.8 million are company may not grow, or may grow at a smaller "The boom has come and gone,” says Play Meter in hands friendly to Nate Dolin. That means a float ol rate, racked up sales of between $5.3 million and $5.9 editor Mike Shaw, who predicts a serious industry only around 700,000 to 800,000 shares, vs. a reporte<t ■ Critical stories In both Barron's and the Wall Street million. But the business-was for the birds; in both shakeout. short position of around 265,000. Clearly, any healthy Journal have raised serious questions about the years, the company lost money. Adding to the manufacturers' and distributors’ buying can push up the stock fast. < company's prospects. SO IN February 1981, MorTronics, in a revitaliza woes, are the expectations of sharply rising sales of Slaying And to top it alt off. insiders beginning this month tion effort, made a private placement of 2 million conversion kits. ’These kits, which, say, go for $1,000, ONE MORTRONICS bull — if you can call him that — will have the opportunity (according to the common and preferred shares at 75 cents a share. enable the video game operator to change the existing — is Barry Rubenstein, a broker at Prescott, Ball & prospectus) to- unload huge amounts of holdings This raised $1.5 million which enabled the company to machine into a virtually brand new and different type Turben; he and his wife own 350,000 shares at 75 cents, Huge storm (upward of 2 million shares). acquire a fast-growing distributor of coin-operated of game; thus, he doesn’t have to shell out some $3,000 a share. A nervous Rubenstein acknowledges that suspect video games in September of that year. for a new machine. Obviously, any strong demand for “MorTronics might not grow from here or grow at d IN THE FACE of all of this, mighty MorTronics has smaller rate"; further, Uiat "induslry fundamentals been a dazzling market performer. Selling at just 75 After that, mighty MorTronics was on its way. A these kits would play havoc with manufacturer and couple of similar acquisitions were made in .'82 and distributor profits. are deteriorating." But after saying that, would yoii cents a share in February 1981, the stock shot up more this resulted in a snappy turnaround as MorTronics Given the undeniable industry problems, why the believe he went on to tell me; "I have no present than tenfold to a high last week of 13 (up from 9^ 'a the went into the black in fiscal '82 — earning 16 cents a very recent run-up in MorTronics shares? intentions of selling my stock.” He declined to booked prior week) before running afoul of a bit of share (assuming full taxes) on revenues of $14.2 Both treasurer Jerry Dodson and director Larry elaborate. hits East profit-taking. million. Dolin (son of chairman Nate Dolin) would only say, Apparently, word got around that I might be doing a At press time, it was around U'-4 — meaning it's In its latest quarter, though, pre-tax earnings would after some prodding, that nothing’s going on to story on MorTronics. And this prompted on^ LONDON (UPI) - A 37-year-old dumps this much snow, it’s sportin'g a wondrous price-earnings multiple of unidentified caller to let me know that "no way is this By Tim Coder have been flat — save for over $200,000 of investment account for the recent spurt. In fact, Dodson, who civil servant was charged with United Press International dangerous,” warned Ryan Tilley, a around 45. based oh some Wall Street expectations of income'. This suggests clear deterioration in video seems like a nice enough fella, told me he’s not stock going down despite what you say. ’ ’ He reminded murder Friday in London’s biggest • forecaster for the government’s about 25 cents a share in fiscal '83earnings (assuming game volume in one or more of the distributors iU,^,--aHo\^ed to talk to the press. Larry Dolin suggested I me that Barron’s columnist Alan Abelson (an old mass murder case — the slaughter The biggest storm of the decade Severe Storms Forecast Center in full taxes). , acquired. talk to his fatner, but alas, no luck; Nate was friend) had tom the stock apart and the stock closed of up to 17 young men in a case that paralyzed the MidAtlantic region Kansas City, Mo. Why the big run-up (both ovi r'th? past couple of unreachable and thereafter so too was Larry. higher the day of the story; further, that it only fell '/<T Officials warned everyone to stay years and more recently'.’) The company’s strategy is clear; Buy video game eclipsed even the rampage of the Friday in nearly 2-feet of snow and distributors, preferably ones with $20 million or so of in the face of a very negative Wall Street Journal; notorious Yorkshire Ripper. 50 mph winds — closing government put. The big rise in recent years clearly reflects the I'VE HEARD repeated allegations that MorTronics story. company's entry into the distribution of coin-operated annual sales, and build a big business fast (like a $200 Maybe so, but as one short seller In MorTronics puL The suspect, Denis Andrew offices, airports in the nation’s “If you have to go out, don’t,” million volume in the next two years, sources close to shares are being riggdd (kept artificially high) (1) to Nilsen, was charged with the capital and hundreds of schools and warned a police dispatcher in video games at a time when industry sales were ensure a high stock price with which to make more it; “Maybe they’ll try to run this one to the moon. I exploding. MorTronics say). And this strategy — coming as it did hope not, but ultimately reality will set in. It never; murder of Stephen Sinclair, the businesses. The storm churned into Wytheville, Va.. as highway crews during surging industry sales — sent the company’s acquisitions, (2) to force the short sellers (the bettors only victim so far identified of the Northeast with near blizzard scrambled to keep up with countless In fiscal '80 and '81. MorTronics, basically an on a lower stock price) to throw in the towel, thus fails. ” ; operator of 26 Kentucky Fried Chicken franchises. shares flying. three whose dismembered re fury. accidents. mains have been found. Police Power blackouts left thousands in Federal and city offices in were searching for 13 to 14 more the cold, and blowing snow re Washington were closed about noon victims. covered highways faster than plows time, giving workers an opportunity Small business "I got the shock of my life,” could clear them. to make it home in 10 inches of snow Nilson’s 63-year-old mother told Yet another powerful storm before they got stranded for the The Standard newspaper after he weekend. Up to 18 inches of snow MANCHESTER NEW CAR DEALERS was arrested. barreled up the battered Southern was expected. Residents jammed Police refused to release details California coast, but its 8-foot ocean counseling set swells produced little new damage. grocery stores to stockpile supplies. on Nilsen's background other than Washington’s airports — Dulles to say he was a civil servant, but Fair skies and unseasonably mild The Greater Manchester Chamber of Commerce temperatures blessed the nation’s International and National — were and the Connecticut Small Business Development The Standard reported he had once worked as a London policeman. midsection. 4osed at midmorning as was Center have joined forces to offer a series of free Numbing cold clamped a tight Midland’s Baltimore-Washington weekly counseling sessions for small-businessmen ‘"nie last time I saw him was 10 years ago.