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Oops! Make It a Loss for Helionetics : Earnings: Despite last year's repeated hints of profitability, firm finishes $2.9 million in red instead. Analysts call chairman's optimistic projections 'a joke.'

March 31, 1993|JAMES S. GRANELLI | TIMES STAFF WRITER

IRVINE — Helionetics Inc., which repeatedly promoted its prospects for profitability last year, reported Tuesday that it had an annual loss of $2.9 million, or 30 cents a share.

The maker of power equipment and computer display components had posted a 1991 profit of $18,000, less than a penny a share. Revenue for 1992 was $13.4 million, up 34% from $10 million for the previous year.

The company's chairman, Beverly Hills financier Bernard Katz, attributed the audited loss to conservative techniques used to account for expenses in developing its latest technology, the adaptive injection mode (AIM) filter, which produces safer and more efficient electrical power. He said that the same accounting will give the company a first-quarter unaudited profit this year of more than $1 million.

But analysts were skeptical, pointing to what they described as reckless projections he has made in the past.

At the end of 1991, for instance, Katz predicted that Helionetics would earn $4 million on sales of $25 million for 1992 and that the figures would continue to rise dramatically in the next four years.

On Dec. 30--the day before the fourth quarter ended--E. Maxwell Malone, the company's president, said that Helionetics would earn more than $500,000 for the three-month period on quarterly sales of $5 million, according to Bloomberg Business News.

Instead, the company posted a quarterly loss of $4.1 million, about 41 cents a share, compared to a loss of $2.2 million, or 35 cents a share, for 1991's final quarter. Revenue for the three-month period increased only to $3.2 million from $2.5 million.

The company's results led analysts to criticize Katz.

"The numbers he projects are an absolute joke," said Peter Miller, an analyst at Roffman Miller Associates Inc. in Philadelphia. "You have to be accountable for your projections. This guy doesn't care at all."

Carl R. Frederick of Frederick Research Corp. in Plainfield, N.J., said that predicting earnings for small companies like Helionetics is nearly impossible. Last week, Frederick predicted the company would post 1992 earnings of 10 cents a share.

"Bernie Katz wears rose-colored glasses," Frederick said. "But the AIM filter technology is very valuable, and Helionetics is the only company that has it. If Helionetics doesn't totally screw it up, it's got enormous potential."

Undaunted, Katz predicted Tuesday that Helionetics will earn $1 million to $5 million this year on sales of $22 million to $40 million--if the company can get loans to finance its sales plans.

He said that his previous projections didn't come true because they were based on the company's ability to obtain bank loans. Banks, however, wouldn't lend any money, he said.

Malone said last week that the AIM filters, scheduled for mass production last year, will now be shipped starting this summer by a new subsidiary, AIM Energy Inc.

Katz said Tuesday that Helionetics will spin off AIM Energy and try to sell 35% to 40% of the new company in a private placement.

The company's stock price fell 6.25 cents a share to close Tuesday at $3.3125 on the American Stock Exchange.

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