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Zapping Scuds, Saving Lives


Inside Wall Street

ZAPPING SCUDS, SAVING LIVES

In the aerospace business, Special Devices is known as the company that supplied the initiator, or the trigger, for the Raytheon-built Patriot missile that became a big hit during the Persian Gulf War. Now the company, whose aerospace operations account for 58% of sales and all operating profits, wants to expand its other business: initiators for auto air bags.

Some investors believe the big switch will give Special Devices a badly needed new image--and better Street following. With much of the aerospace industry in a slump, Special Devices has lagged behind the market, at 9 3/4 a share, almost where it was when the company went public on Aug. 7, 1991.

Stan Trilling, a first vice-president at PaineWebber Inc. in Los Angeles, believes the stock is cheap. The company is currently the third-largest supplier of initiators to air-bag makers. The initiator is the trigger that makes a sensor explode the charge to inflate an air bag. Trilling notes that Special Devices' air- bag unit turned profitable this year and will help boost fiscal 1993 earnings to 45 a share, and to 75 next year, vs. fiscal 1992's 25 . Trilling sees the stock doubling in a year.

Analyst James Spencer at Wertheim Schroder figures that Special Devices' initiator sales will approach $50 million by 1996-97, as TRW, which makes air bags for General Motors, follows through on its contract to buy some 75% of its initiators from Special Devices. The company was also chosen by Atlantic Research to supply initiators for its air-bag inflators manufactured by Bendix Atlantic Inflator for certain Chrysler vehicles. GENE G. MARCIAL


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