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Inside Wall Street
A STOCK THAT'S IN THE AIR
A virtually unknown company, Geotek Industries is turning out to be one of the market's big surprises this year. Its market cap has boomed from $25 million a year ago to a stunning $390 million, as its stock has zoomed from 2 a share in mid-1992 to 83 4 by Sept. 22. This Ramsey (N.J.) wireless telecommunications company, which recently acquired the only provider of specialty mobile radio services in Britain, has yet to make money. Revenues last year fell to $27.2 million from 1991's $36.8 million.
So what's Geotek's big appeal? The company promises to commercialize one of Israel's military technologies. In a joint venture with the Israeli defense research and manufacturing agency Rafael Armament Development Authority, Geotek aims to use the Israeli military's "frequency hopping system" in specialized mobile radio communications. Transportation and courier companies would utilize this system.
This advanced digital mobile radio technology has enabled the Israeli military to make phone conversations under the toughest conditions, explains Geotek President and CEO Yaron Eitan. He notes that the technology has provided reliability and security to Israel's military phone system.
Geotek will make full use of the underutilized "specialized mobile radio" frequencies used by taxi operators and courier companies, says Eitan. Geotek already owns a significant number of radio frequencies in the U.S. to operate mobile radio systems, which the company hopes to provide to companies that have wide sales networks.
Analyst Sewall Hodges at Arnhold & S. Bleichroeder, a New York investment firm, sees revenues jumping to $65 million in 1993 and to $80 million in 1994. Earnings, however, aren't expected until 1995. Even so, Hodges thinks the stock is undervalued and expects it to hit 20 by mid-1995. Some big U.S. investors have bought in, including BEA Associates, which owns a 5% stake.GENE G. MARCIAL