Business Notes: Jan. 13, 1986

WALL STREET The Best Picks of ’85

The value of U.S. common stocks in 1985 climbed by a record $462 billion. While that was enough to spread some profits around to a lot of investors, the biggest winners were shares that started the year very cheap. Most energy stocks did not do very well last year because of the world petroleum glut, but Texas International, an oil and gas concern, rose the furthest among the 2,312 issues listed on the New York Stock Exchange. It jumped by more than 400%, from 1 1/8 to 5¾. Reason: a deal to develop oil wells in Egypt.

The biggest winner in over-the-counter stocks was Span-America Medical Systems, a South Carolina manufacturer of foam pads for hospital beds whose shares jumped from 3 1/8 to 22¾. Also among the highflyers were the Gap, the casual-wear retailer, whose stock more than tripled, from 20½ to 62¾; and Tonka, the Minnesota toymaker, whose Pound Puppies and Go-Bots carried its shares briskly along from 10¼ to 27½. On the American Stock Exchange, American Medical Buildings, which had a close brush with bankruptcy in 1984, was the biggest of the big last year. It jumped from 1 1/8 to 6 7/8.

TAKEOVER BATTLES Union Carbide in the Trenches

Ever since a leak of deadly methyl isocyanate at its plant in Bhopal, India, killed 2,500 people and injured more than 20,000 in December 1984, Union Carbide has been locked in one battle after another. Even as it faces up to $100 billion in lawsuits filed on behalf of the Bhopal victims, the Danbury Conn.-based firm (1984 sales: $9.5 billion) is struggling to fend off a hostile takeover by GAF (1984 sales: $731 million), a manufacturer of building and chemical products. In a defensive move, Carbide decided last week to sell its consumer businesses for some $2 billion. That will help the firm raise money that can be used to pay for a buy-back offer for 55% of its stock. The price: $85 a share, topping GAF’s best offer of $78. A smaller Union Carbide will also be a less attractive target for GAF.

Union Carbide’s consumer division, which last year accounted for 20% of company sales, contains such winners as Eveready batteries, Prestone antifreeze, STP fuel additive and Glad trash bags. Among the ready suitors rumored to be interested in these popular products are Procter & Gamble, Unilever and Ralston Purina.

PERSONNEL Video Headhunting

Electronic matchmaking services have long enabled love-starved clients to choose dates by watching videotapes of potential companions. Now the Corporate Interviewing Network, a company based in Fort Lauderdale, is giving employers a chance to use a similar technique to screen job applicants. Firms using the service send CIN a list of job candidates. Then CIN arranges to videotape interviews with them at 19 regional offices from New York City to Los Angeles, using questions drafted by the employers. Within seven days after talking with the last candidate, CIN sends the employer a tape of the applicants.

The video interview has some advantages over the face-to-face chat. The tape can be passed around to several executives for review, crucial parts of the interview can be watched more than once, and if a candidate looks hopeless in the first five minutes, the employer can hit fast forward and move to the next applicant. The best of the lot can then be called in for in-depth personal interviewing. CIN charges $50 per 20-minute tape or $100 for 40 minutes. Its 150 clients include CBS-Fox Video and Texas Instruments.

TRADE Nuts to the Soviets

Americans doing business with the Soviets may be interested in a bit of intelligence gathered by the almond growers of California’s Central Valley. The Soviets, it seems, are downright crazy about chocolate-covered almonds. Says Walt Payne, marketing director for the California Almond Growers Exchange, producers of Blue Diamond nuts: “They wrap them in foil with pictures of different animals on the package.” He should know, because the Soviets are now buying more than 10% of the entire crop of California almonds.

The booming sales began after a poor hazelnut crop in Turkey in 1984 drove up prices and forced the Soviets to look for a substitute nut to use with their chocolate. Once tasted, the almonds became an obsession; the Soviets could not stop at just one. That was perfect timing for some California growers, who had overplanted and were facing huge losses. This year Moscow is expected to purchase 60 million lbs. (value: $80 million to $90 million), up from 11 million just four years ago. Thanks to post-Geneva détente and a good Soviet taste for imported nuts, almond growers expect exports to keep on climbing.

SEMICONDUCTORS Dangers in Tough Testing

As more and more information is crammed onto the tiny semiconductors, or computer chips, that now run everything from talking bears to intercontinental missiles, quality control is becoming a more daunting task. According to Dataquest, a research firm that studies the electronics industry, up to 3% of the silicon wafers fail to work properly upon delivery. To improve the quality of the chips they sell, manufacturers regularly test some of the wafers, subjecting them to heat, static electricity and other troublesome conditions. But preliminary findings from a study under way at Clemson University suggest that one of the tests may actually be doing far more harm than good.

According to Clemson Computer Engineer Michael Bridgwood, who is undertaking the study for a group of U.S. semiconductor makers, the repeated electronic impulses that bombard the chips during the static tests sometimes cause serious internal damage that is not immediately apparent. Ironically, the problem may be worse in the chips used by the U.S. military. Since they are more thoroughly tested than other chips, more hidden damage may be done.