charlotte.com
Posted at 7:42 p.m. EST Wednesday, December 23, 1998
1998
A girl's new best friend? N.C. firm's gem looks like diamond but costs less
<A new diamondlike gemstone created accidentally by a Research Triangle area company has hit the market in time for the holidays, jewelry's best season. But don't expect it to be easy to find. The sparkling, clear gems, called moissanite, are coming off the production line as fast as the manufacturer can run it but slower than jewelry retailers and customers would like.
''One store placed an $80,000 order, and we only had a few stones in the size range they wanted,'' said Jeff Hunter, chairman and CEO of C3, the Morrisville company that makes moissanite (pronounced MOY-san-ite).
Less expensive than diamonds but costlier than cubic zirconia, the first moissanite gems were shipped in late summer to a few test-market stores in Atlanta and South Florida. Last month, C3 announced it had shipped moissanite stones to 24 other U.S. retail jewelers.
In Charlotte, the only retailer to carry the gemstone is Al Rousso's uptown. Other Carolinas retailers with moissanite are W. Galyean Jewelers in Asheville, Walter Guy Jewelers in Fayetteville and Jewels of Pinehurst.
The situation is both the best and worst of worlds for C3. As sole
producer, the company can pull the strings of supply and demand by
keeping the price of moissanite up while the supply is limited.
But shares of the still-young company are trading below their original
offering price of $15 a share in 1997. C3 needs to sell a lot of moissanite to boost revenues and turn a profit before investors are dazzled.
''It is a mixed blessing,'' said John Paulson of C3's current dilemma. A research analyst at Paulson Investment Co. in Portland, Ore., Paulson said he's confident the company can ratchet up supply without pressuring the prices for a long time.
''I liken them to a biotechnology company that has exclusive patents to a very desirable product,'' he said. Paulson was managing underwriter on C3's IPO.
What exactly is moissanite? A chemistry professor, Henri Moissan, found the mineral in the late 1890s in a meteorite at Diablo Canyon in Arizona. It was named for him in 1904.
Later, moissanite was found to be the chemical silicon carbide, which can be reproduced synthetically and is used for industrial purposes and in the semiconductor industry.
Moissanite ranks second only to diamond as the hardest gemstone in
nature. But its potential as a gemstone went unfulfilled. Unlike diamond, natural moissanite is almost always too tiny and oddly colored to be mined for commercial purposes.
But the story of modern moissanite began to change in the late 1980s when an inventive mind at a Durham company had what his brother calls an ''out-of-the-box'' experience.
Eric and Neal Hunter had founded a company called Cree Research in
1987 with the idea of exploiting silicon carbide as a semiconductor medium. Cree made the first commercially successful silicon carbide wafer in 1990. It went public in 1993. Today, Cree is the world's largest manufacturer and supplier of silicon carbide wafers and related products to the electronics and semiconductor industries.
But Eric Hunter was always thinking about the next application for silicon carbide. He came up with the idea of a surgical knife and hired a master diamond cutter to test the notion. But the craftsman suggested a gemstone instead. C3 was born.
Eric Hunter since has gone on to other experiments but retains a sizable interest in C3. One other critical connection remains: Cree supplies C3 with the crystals from which moissanite gems are cut and shaped.
Cree actually grows the crystals in the laboratory under a proprietary, patented process. It's an arduous task. Producing one crystal, which is bigger than a moissanite gemstone, takes anywhere from 15 minutes to one week.
Jeff Hunter said Cree recently was able to make a three-inch crystal, up from two inches, thereby increasing the gemstone yield. From any one crystal, C3 produces from one-tenth of a carat to 2 carats.
Despite some early publicity that pitched moissanite as a diamond
substitute, C3 is not positioning the gemstone that way, Jeff Hunter said. Instead, C3's target market is working women aged 24 to 54 who want to buy a nice piece of jewelry for themselves from a reputable jeweler, not from a discounter or department store.
Many gemologists say moissanite gems rival diamonds in their ability to reflect light and their fire, or the dispersion of that light into color. Cubic zirconia varies greatly in quality but is generally considered costume jewelry. It's whiter, does not reflect much light and tends to fog, gemologists say.
As for pricing, C3 is aiming toward the higher end of the middle. One
California jeweler prices a 1 carat moissanite stone at $550 while a 1 carat diamond at the same store is $6,000. A small cubic zirconia ring goes for as little as $25.
Harold Dimond of Al Rousso's has a small selection of moissanite rings. Despite limited advertising, ''sales are good,'' he said.
Vicki Freeman, an appraiser at Lions Ltd. in Charlotte, said to the
untrained eye, and even the trained eye at times, moissanite stones are indistinguishable from diamonds. ''This is something that's creating a storm of interest in our industry,'' she said.
Jeff Hunter said he has conducted a cautious education campaign about
moissanite with gem trade associations and jewelers. He's had to:
Moissanite transmits heat like a diamond, which means it can fool jewelers who use a special thermometer to test for a diamond's authenticity. .
In the fall of 1995, he sent a batch of the stones to a gemologist and
director of a trade group in New York City.
''He called back the same day and said, 'Do you realize that if I took this parcel to 47th Street (the city's diamond district) I could walk away with $30,000?' That's when we realized we had an ethical dilemma,'' Jeff Hunter said.
To protect the company against claims of fraud, and to keep others from passing off the gems as diamonds, C3 created a special testing device that screens for moissanite only. Jewelers are buying the devices, called Tester Model 590. The company's first revenues came from the sale of the testers.
C3 also recently announced two international distribution agreements
covering Costa Rica and Japan. Combined, the agreements require a
minimum purchase of about $10 million through 2000.
To boost sales and recognition of moissanite, C3 aims to have the
gemstones in 100 retail locations in the United States in the next month. The company has stepped up advertising, including a campaign in People magazine this month in southeastern editions.
The company will lose money this year, but Paulson predicts earnings per share of at least 25 cents next year. ''I think people who are risk tolerant have a good chance to establish a position in the stock now, just before sales take off,'' he said.
Reach Leah Beth Ward at (704) 358-5249 or lbward@charlotte.com .
|
