Cranbury, New Jersey, Nov. 26 (Bloomberg) -- Shares of Ariel
Corp., a money-losing maker of modem cards for Internet-access providers, tripled for a second time in two sessions after the company said government agencies approved its new product.
Ariel jumped 26 1/4 to 37. Some 50 million shares changed hands, five times Ariel's shares outstanding, making it the most active U.S. stock in an abbreviated holiday session.
The shares, which traded as low as 1 7/16 on Aug. 5, got a boost from talk about the company and its new modem card on Internet message boards. Ariel, which has about 100 workers, hasn't had an annual profit from operations since its shares began trading in 1995.
``The market is clearly saying they are selling a cheaper product compared with their competitors,' said Gil Knight, a money manager with Allied Investment Advisors Inc., which oversees $11 billion.
Ariel said its new $9,100 card set costs $100 less for each user than comparable equipment from Lucent Technologies Inc. or Cisco Systems Inc., two of the biggest Internet-equipment makers.
The company, based in Cranbury, New Jersey, near Princeton, received certification for connection to international digital- telephone networks in the U.S., Canada, most of Europe, Australia and most Pacific Rim countries.
In a statement released after the close of regular trading, Ariel said it ``has no pending announcements that explain this level of activity.'
Internet Chat Yahoo Inc.'s message board was swamped with hundreds of notes on Ariel. Postings included exhortations to ``buy now' before an afternoon surge. One note speculated that Lucent and Cisco could get into a bidding war over Ariel.
Some messages on the Yahoo site encouraged people to buy Ariel with the hope that major investors would push the stock price higher on Monday after the Thanksgiving holiday.
Others warned that big investors won't buy shares at the higher price and said that the stock may plunge on Monday.
Ariel now trades at about 29 times its sales in the last 12 months, which totaled $12.57 million. Lucent Technologies Inc., the largest phone-equipment maker, trades at about 6 times its sales.
The average trade in Ariel today was 379 shares, indicating that the stock has become a favorite of ``day traders' -- individual investors who buy rapidly rising stocks in hopes of making a quick profit. The average trade in International Business Machines Corp., in contrast, was almost 1,000 shares.
``It's just one of those times on a thinly traded week where the day traders make the world go round,' said Craig Johnson, principal analyst with market researcher Pita Group in Portland, Oregon. Johnson follows networking, computer and telecommunications companies.
New Product
Ariel's new card set is plugged into a computer server to answer telephone calls for companies that provide Internet service. It answers the calls, then connects people to the Internet. The product runs on computers using both Microsoft Corp.'s Windows NT and Linux, a rival operating system. It will be available next month for both systems. Carmen Grasso, who said he runs a small Internet service provider in New Jersey and is shorting Ariel shares, said Ariel's product is ``nothing special.' He0 said the server computers the cards plug into are less reliable than Cisco or Lucent gear.
``This is no major breakthrough,' said Grasso, president of Computer Integration Technologies Inc., which he said has about 1,500 to 2,200 users. ``The future is high-speed wireless and broadband. This is none of that.' The product's introduction comes at a time when the fastest- growing ways to use the Internet are through cable modems and digital subscriber line equipment, both of which provide connections many times faster than dial-up modems.
Ariel had a loss of $9.26 million, or 95 cents a share, on sales of $8.69 million in the first nine months of the year. It had 9.76 million shares outstanding as of Sept. 30. Dennis Schneider, Ariel's senior vice president of worldwide marketing, declined to make a profit forecast on Wednesday. He said the new product likely will be popular with small and medium-size Internet service providers. |
