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Inside Wall Street
TWO GOOD OMENS ON AURA'S HORIZON
Aura Systems has become a battleground for the bulls and the short-sellers, and a resolution may come sooner rather than later--with the blows landing on the bears. The reason: The company expects to sign a contract with two auto makers--one Japanese--for use of its "magnetic valve actuator," a technology to improve performance and fuel economy, and to cut emissions. Another plus for the bulls: A lawsuit filed in 1991 by Adolph Coors alleging patent infringement of its can-making technology may be resolved in Aura's favor.
"This will be a double whammy against the shorts," says a money manager who owns a big stake in Aura. The short position in Aura is 3.4 million shares, or 10% of its shares outstanding. This pro says that if these two events take place, "a mighty short-squeeze will blow the bears out of the water--and out of Aura."
Tom Fendrich of Fendrich Associates Institutional Research agrees. When the contracts come, he says, the "skepticism on Aura's ability to commercialize its technology," will be discredited. The market will start valuing Aura on its technology base and potential earning power. He puts the value of Aura's technology at $1 billion minimum, or $30 a share. The stock is trading at 8. Aura's technology include vibration-suppression for aircraft, sound enhancement for radio and video, including Nintendo and Sega games, and display systems for projection TV--for which Aura has a joint venture with South Korea's Daewoo Electronics.
Aura CEO Harry Kurtzman confirms talks are going on with two carmakers but declined to identify them. He also expects a favorable ruling on the Coors' lawsuit "fairly soon."GENE G. MARCIAL