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Supermac Is Starting To Sizzle


Inside Wall Street

SUPERMAC IS STARTING TO SIZZLE

No, SuperMac Technology isn't another way to cook up giant burgers. It's an upstart high-tech company that's starting to catch the fancy of some techies, causing its stock to log in a sizable gain. Since going public in mid-May, SuperMac's stock has climbed from 9 a share to 14.

"Although the stock has gained strong momentum, SuperMac remains way undervalued," says Charles Finnie, a partner and analyst at Volpe, Welty, a San Francisco investment bank that co-sponsored SuperMac's initial public offering along with PaineWebber and Montgomery Securities. Based on projected yearly 20% earnings growth, he sees the stock hitting 20 in six months and 30 in a year.

As a major producer of high-performance color-graphics systems for desktop publishing, a sizzling area in the computer industry, "SuperMac has been coming out ahead of expectations," says Finnie. So he has raised his fourth-quarter earnings estimate from 20 cents to 22 cents a share, vs. last year's 15 cents. Finnie hiked his 77 cents estimate for 1992 to 80 cents, and his 95 cents figure for 1993 to $1. SuperMac earned 40 cents last year.

NO STRINGS. Focusing on the high-end desktop publishing market, SuperMac's 24-bit color-graphics circuit boards and large-screen color monitors have been rated among the best by analysts.

So far, Apple Computer is SuperMac's main customer. More than 20 SuperMac products are designed for use with Apple's Macintosh computer. The company's relationship with Apple isn't based on any binding contract--so Apple could walk away if it chooses.

But that isn't likely to happen soon, argues Finnie. SuperMac, he notes, recently said it is making new accessories for Apple's Macintosh Duo System, including an adapter that connects Apple's new PowerBook system to desktop Macs. "The fact that SuperMac continues to provide Apple with technology shows Apple's high regard for SuperMac's expertise," says Finnie. SuperMac's new products include DigitalFilm, a video board that provides full-screen, full-motion video; ProofPositive printers, which produce full-color photo-like images; Thunder/24 for Windows, a graphics accelerator that marks SuperMac's entry into the Windows market; and VideoSpigot for Windows, a version of SuperMac's VideoSpigot line that enables Macintosh users to capture full-motion video "in real time" from a video camera, VCR, or TV on a hard disk.

Another SuperMac bull is Mike Murphy, editor of the California Technology Stock Letter. "SuperMac's products are hot," he says, adding that the company's big advantage is in profit margins. "While SuperMac's costs are relatively low, its products sell at premium prices."GENE G. MARCIAL


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