Cable Design Technologies: A Tech Stock with Profits
By M.Paolucci

What if I told that there is a cable and wireless company out there that trades on the prestigious New York Stock Exchange, is profitable and is only $30 per share. You'd probably tell me to take a hike. With most tech issues now trading at stratospheric levels, it would be nice to find something that both Wall Street and Main Street have missed.

Cable Design Technologies Corp. (CDT), based in Pittsburgh, PA, designs and manufactures specialty electronic data transmission cables and network structured wiring systems. CDT products include high performance copper, fiber optic and composite cable constructions, connectors and component assemblies that are used in network communication, computer interconnect, wireless, commercial aviation, automotive, automation & process control and other applications.

Since 1985, the company has slowly and steadily been growing via acquisitions, roughly 20 to date.

Its latest acquisition, Industria Tecnica Cavi, an Italian manufacturer of coaxial cable, seems to be a great fit for CDT. The acquisition, just announced last month, seems particularly attractive in that it will be accretive to earnings, will give CDT a stronger presence in Europe, provide a foreign base for manufacturing and will increase the company's overall capacity.

Cable Design has quickly been moving into the highly lucrative area of optical cable and networking equipment. Just this morning, the company's Mohawk division announced a multi- million dollar fiber optic order with a global provider of Internet, long-distance and competitive local exchange services in the U.S., Canada and the U.K. Financial details were not disclosed, however.

Paul Olson, President and CEO of CDT, commented, ``This order validates our strong and growing presence in the fiber optic arena and we will continue to build upon this win."

Another reason to take a look at CDT is that the company sports some large institutional investors. With names like Fidelity, Oppenheimer, Jeffrey Vinik (ex-Fidelity Magellan Fund manager), Massachusetts Financial Services, Lord Abbott, and Barclays Bank, it helps an investor sleep a little better at night. In total, 76 percent of the 28.2 million shares of CDT outstanding are owned by institutions.

Looking at insider buying transactions, which can often be a precursor to future upward moves in a company's share price, it appears that there has been some buying. In the last six months, a total of 1.49 million shares have been acquired, with most of the shares being purchased in the teens.

Financials look good, but should improve even more as sales of its higher-margin interconnect, wireless cable and fiber optics products start to take off.

For the three months ended January 31, 2000, revenues were $178 million, up from $160.9 million in the prior year period. Net income for the second quarter was 36 cents per diluted share versus last year's second quarter net income of 31 cents per diluted share, excluding non-recurring charges. The company currently trades for less than 20 times fiscal 2000 earnings estimates of $1.68 per share.

For the quarter, the company's Network Communications segment saw sales grow 14 percent over last year to $120.3 million, representing 68 percent of total company revenues. Also, the growing demand for cellular communications has resulted in the expansion of the company's cable sales and assembly services to providers of wireless services and products.

Out of the six analysts surveyed by Zack's Investment Research who follow CDT, five have either Strong Buy or Moderate Buy ratings.

If comments from the CEO are any indication of the future of the company, things look good. ``We are very pleased with our results considering the seasonality of the quarter and the adverse affect that Y2K had on our sales in the last part of calendar year 1999,'' President and CEO Paul Olson stated.

He added, ``CDT is entering the third quarter with the wind at our back and we think that we will be able to capitalize on the demand for high-speed infrastructure…we think we are well prepared to take advantage of the strong demand for increased bandwidth by providing an extensive portfolio of products.''