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Reptron's earnings calm fears

By MICHAEL BRAGA

© St. Petersburg Times, published July 21, 2000


TAMPA -- Reptron Electronics reported stronger-than-expected earnings Thursday, calming investors who have been jittery since one of its major stockholders began dumping hundreds of thousands of shares.

The Tampa-based manufacturer and distributor of computer components reported that revenues increased 74 percent to $141-million during the three months ended June 30, up from $81-million in the same quarter a year earlier.

Net income was $1.4-million, or 22 cents a share, 7 cents a share higher than analysts expected. Earnings were down from $5.3-million, or 87 cents a share, in the year-ago quarter, when the company benefited from a one-time gain of $8.3-million.

The company's stock closed Thursday at $14.25, unchanged from a day earlier. Since June 1, the price has zigzagged between $11 and $15 a share. Analysts said investors feared the stock was topping out after increasing from as low as $7.63 at the start of the year.

The apparent cause of the recent volatility: MM Holdings International, a Miami-based investment firm owned by Milan Mandaric, sold 415,000 shares of Reptron stock between June 9 and July 12 at prices between $11.25 and $12.38.

"The sales were definitely scaring the market," said Henry Voskoboynik, an analyst with First Union Securities. "There was an awful lot of volatility."

Mandaric began buying Reptron stock in late 1998. He accumulated just over 1-million shares, or about 16 percent of the company's outstanding equity. He paid an average of $6 a shares and still owns 597,100 shares.

Mandaric, who made an estimated profit of $2.3-million on his recent stock sales, could not be reached for comment. But Reptron chief financial officer Michael Branca suggested Mandaric sold the shares because he "ran into cash flow needs and had some diversification objectives."

Stuart Bogard, an analyst with Little Rock, Ark.-based Stephens Inc., said the sell-off is not a sign that Reptron is heading for problems. He says the company's second-quarter results reinforce that conclusion.

Branca said the worldwide shortage of electronic parts had a lot to do with the improvement in Reptron's numbers, causing prices and margins to increase. But Branca says his company's revamping of commissions it pays its sales force also helped to improve the bottom line.

"We are now paying higher commissions for sales of higher margin products," Branca says.

Branca added that he did not expect any setbacks in the year ahead because the market for computer components is expected to grow by at least 30 percent and prices are expected to remain high.

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