Wednesday, October 1, 2003

Good ... and bad in third quarter


Enquirer 80 up 4.5%

By James Pilcher
The Cincinnati Enquirer

In the past year, two main competitors of laser eye surgery provider LCA-Vision Inc. went bankrupt.

The Sycamore Twp.-based company saw an 11 percent increase in the number of procedures done at its LasikPlus centers in the second quarter, compared with the same period last year. And it was able to almost double what it charges for fixing people's eyesight.

Little wonder that LCA-Vision is atop the list of last quarter's top performers on the Enquirer 80 index.

LCA-Vision's stock went up 51.8 percent in the quarter, closing at $13.63 Tuesday. For the year, it is up 498 percent, starting at just above $2 a share and reaching a high of $18.50 last month.

As a whole, the Enquirer 80, an index of locally based companies or those with significant local operations, rose 4.5 percent in the last quarter.

Other top performers in the local index included Highland Heights-based electric and fiber optic cable maker General Cable Corp.; Walnut Hills-based restaurant chain Frisch's; Blue Ash-based savings and loan First Franklin; Hebron-based computer consulting firm Pomeroy IT Solutions Inc.; and Blue Ash-based electronic medical records firm LanVision Systems Inc.

LCA-Vision's success comes at an unusual time for its industry. Usually considered a discretionary expense normally not covered by health insurance, the company is now charging about $2,400 a patient during a time of economic uncertainty.

"What we have done as company is converted what is considered a luxury item into an affordable value-priced item by being able to control expenses internally and externally," company chairman and chief executive officer Dr. Stephen N. Joffe said.

He did not want to talk specifically about his company's stock performance, because LCA-Vision last week applied for a secondary stock offering. That application is under review by the Securities and Exchange Commission.

But Joffe acknowledged that the market had probably responded to the changing marketplace and that his company had clear dominance in the laser eye surgery market.

Shares of General Cable, after the company struggled with weak demand for its wire and cable products for more than a year, got a lift from the Northeast blackout Aug. 14.

The company's shares closed Tuesday at $7.96, up 47 percent for the third quarter.

But at least one analyst following General Cable lowered his opinion from a buy to a hold more recently, believing that the run-up has fully valued the shares.

"While we continue to believe the business fundamentals are improving, we think the current valuation fully reflects our earnings estimates," Devlin Lander of Morgan Joseph & Co. said.

Frisch's, which operates family-style Big Boy restaurants and buffet-style Golden Corrals in Ohio, Kentucky and Indiana, saw its shares skyrocket nearly 35 percent over the past quarter.

The stock price climbed steadily since the company reported record sales and earnings for fiscal 2003, which ended June 1. The company attributed much of its success to continued strong sales and the expansion of its Golden Corral chain, including a new restaurant that opened in July on Cincinnati's west side.

"Our strong performance shows that investors are once again looking for companies that can grow in good times and bad, and will share their growth with their stockholders,'' said Craig Maier, president and chief executive of Frisch's Restaurants Inc. "Frisch's Restaurants has made a profit and paid a cash dividend every year since 1960 ... and our cash dividend has increased for six straight years, including a 22 percent increase in September.''

A bidding war for Dayton, Ohio-based Elder-Beerman Stores Corp., boosted its stock price almost 36 percent in the past quarter as retailer The Bon-Ton outdueled Wright Holdings and EB Acquisition - an Ohio-based private investment group - for the struggling department store chain.

The Bon Ton's successful bid of $8 a share, or $92.8 million, helped Elder Beerman's stock price reach a 52-week-high of $8.88 Sept. 16.

LanVision was another health-care-related firm to do well. The company, which makes and operates computer medical records software, was up almost 25.8 percent for the quarter, closing at $2.49 Tuesday.

Company chairman and chief executive officer Brian Patsy said the stock really began picking up this summer when he forecast revenue growth of 5 to 12 percent for the year compared with last year to Wall Street analysts.

He says most of that growth is recurring, with the company switching to a new subscription-based model for some of its services instead of a one-shot sale of software licenses.

"It's made a huge impact on our business," Patsy said. "And we've got new products rolling off the line ... so all this bodes well for us and for our shareholders."

One company near the top of the list of third-quarter gainers, Pomeroy IT Solutions, achieved the distinction in spite of miserable financial results.

Pomeroy's stock closed at $12.70 Tuesday, up 14.8 percent for the quarter and up 8.5 percent for the first nine months of 2003. But for the quarter ended June 30, Pomeroy's revenue dropped 25 percent to $147.4 million, while its net income plunged 57 percent to $2 million.

For the first half of the year, revenue was down 28 percent, earnings down 62 percent.

But computer and technology stocks were hot during the quarter. The Nasdaq Computer Index rose 10.1 percent.

Enquirer reporters James McNair, Randy Tucker and Mike Boyer contributed. E-mail jpilcher@enquirer.com



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