Safeskin Looks for New Markets
Bloomberg News
January 29, 1999, 6:02 p.m. PT
New York, Jan. 29 (Bloomberg) -- Richard Jaffe, chairman and
chief executive of Safeskin Corp., seldom misses an opportunity
to plug his company. Safeskin is the leading maker of disposable
latex examination gloves for the U.S. medical market.
When Jaffe, 45, did an on-camera interview this week, he
donned a purple Safeskin glove and even tried, unsuccessfully, to
persuade the journalist to wear one as well.
Jaffe will need to continue to hone his sales skills to meet
his goals for the San Diego-based company. At a time when the
stock is under-performing indexes, Jaffe intends to push Safeskin
into new businesses in the hope of capitalizing on its brand
recognition.
''We are now looking at products in information services
(and) logistics services,,'' Jaffe told the Bloomberg Forum.
''What we do is to anticipate future customer needs.''
The next product to come from Safeskin ''could be infection
control, operating room products -- anything that we can service
through our sales force or through our technology.''
Jaffe said that ''without being specific on products, there
are many different areas.'' Safeskin could expand its business of
servicing the semiconductor industry, he said.
''The products are limitless,'' Jaffe said. ''The real
question is what is the customer going to need three years from
now that (they) are not happy with today.''
Shareholders hope that Jaffe's ideas will propel Safeskin's
stock. The shares have lost 12 percent of their value in the past
12 months and, since small-company stocks rebounded beginning
Oct. 8, the shares have dropped 6 percent. Safeskin's shares
gained 7/16 to close at 24 3/8.
''The stock is taking a little pressure, but all the
fundamentals are in place and it will continue to grow,'' he
said.
Jaffe, a native of Great Neck, New York, is pleased about
Safeskin's results. ''Actually, the performance is outstanding,''
he said. ''Our revenue for the year-to-date is up 30 percent; our
earnings are (up) 50 percent.''
Shares Drop
Nonetheless, Safeskin's shares fell 13 percent on Oct. 29
after Salomon Smith Barney analyst Melissa Wilmoth reduced her
investment rating on the stock to ''neutral'' from ''buy.''
Wilmoth was concerned the company's sales would slow.
''That was a one-quarter issue,'' Jaffe said. ''Expectations
got out of line.''
Perhaps, but many Safeskin stockholders can't be pleased
with the company's performance during the past year. The stock
reached a high of 46 3/16 on July 16 and fell to a low of 18 1/8
on Dec. 16.
Asked to make a forecast on Safeskin's shares, he said: ''I
don't predict stock prices. We have a commitment to grow the top
line, the bottom line (by), 25 percent year after year, and
quarter after quarter and we expect to do that.''
Jaffe said Safeskin has a target that 25 percent of the
company's revenue comes from products introduced in the last
three years.
Innovative
Evans Kissi, analyst for Joseph Stevens & Co., compares
Safeskin to Gillette Co., which makes such disposable products as
razor blades for men and women.
''Like Gillette, too, Safeskin is innovative,'' said Kissi,
who has a ''buy'' rating on the stock. He said Safeskin has a
market share of 40 percent to 50 percent in the disposable latex
glove business. ''Safeskin came up with powder-free gloves so
medical professionals could avoid getting allergic reactions from
regular gloves.''
Safeskin has a tradition of innovation. In 1987, to lower
the risk of HIV infection, the Centers for Disease Control urged
health care workers coming into contact with bodily fluids to
wear gloves and similar protective devices. During that year, an
engineer named Neil Braverman founded Safeskin and the company
started making latex gloves in Malaysia the next year.
The following year, Safeskin began producing the nation's
first hypoallergenetic latex examination glove. The first powder-
free version of it arrived one year after that. The company went
public in 1993.
Shareholders can only hope that Safeskin can do as well as
it has done since its debut in the stock market. In the past five
years, the shares have returned an annual 46 percent, more than 4
times that of the Russell 2000 Index of small-company stocks in
the same period. |
