SureBeam's Big Sale Comes With an Asterisk
By Herb Greenberg
11/08/2002 08:21
SureBeam's SURE stock popped 19% earlier this week after the company announced an $8.9 million equipment purchase agreement with Salubris, a Texas limited partnership that was created three months ago.
To listen to SureBeam, which makes gear that zaps bacteria in food, the contract was a great deal for everyone involved. "The purchase of this system will allow Salubris to build and operate a new service center in the Fort Worth, Texas, area," the company said.
Tuesday's press release also quoted David Corbin, president of Fort Worth-San Diego Investments, the general partner of Salubris, as saying, "This is a fantastic opportunity to participate on the ground floor of a rapidly growing industry that improves the quality of life and food safety for the American consumer."
What SureBeam didn't say in the press release was that Corbin also happens to be president and chief investment officer of Corbin & Co. It turns out that Corbin & Co. runs the Corbin Small-Cap Value fund, which as of August had 4.83% of its assets in SureBeam shares. Corbin also owns shares of Titan TTN , SureBeam's former parent.
"It is not our intention to hide anything," says SureBeam spokesman Mark Stephenson.
Well, failing to mention that a new customer is run by the same guy who runs an investment partnership that owns your stock isn't exactly being forthright -- no matter how big or small his stake might be.
For his part, Corbin says he's been involved in Titan for five years and bought SureBeam in its March 2001 IPO. But it's hard to imagine that Salubris' purchase could have come at a better time for SureBeam: On Oct. 31 the company announced that third-quarter revenue tumbled 52% from a year earlier.
The moral, I guess, is that if a company isn't signing up enough customers on its own, its investors can always pitch in. Heartwarming, perhaps, but hardly what you'd call high-quality revenue.
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