The absurd excitement over Tie Rack Plc in investment circles in the UK – a company effectively controlled by completely unknown Swiss interests coming to market on a price-earnings ratio of 31 regarded as certain to see its offer heavily oversubscribed and its shares open at a handsome premium – has its counterpart on the other side of the Atlantic. Aldus Corp, whose Pagemaker desk-top publishing program has done so much to get the Apple Macintosh onto the desk-tops of corporate America, is on its way to market as the most sought-after new issue since Microsoft early last year. The Aldus prospectus, being handled by Alex Brown & Sons and Montgomery Securities, contains an indicated price per share for the flotation of $14 to $16, but that is now certain to be left way behind, and Aldus is expected to get its issue away at between $19 and $20 a share. Yet even at $16, the company is valued at $165m, putting the shares on a price-earnings ratio of 50 and a price-to-sales ratio of 80: in the year to March 31, the company did $3.5m net on sales of $18.4m. Yet all the shares are sold ahead of the flotation and no-one now has a chance of getting in on the high-in-the-sky ground floor – and brokers are sitting on orders for 250,000 shares at $26 as soon as trading starts, so there is certain to be a lively after-market and a handsome profit for stags. So why the excitement? Aldus can legitimately be regarded as a one-product company – it has sold 60,000 copies of Pagemaker, but the IBM Personal version is only starting to move – and word processing software companies – Wordperfect Corp, Samna Corp – are working hard to add desk-top publishing functions to their programs, so Aldus is not likely to be pushing at an open door for much longer. Fans of Aldus point to the fact that the $20m or so to be raised by the flotation is earmarked for acquisitions, so that after it goes public, Aldus can diversify by acquisition and begin the long climb to get up there with the Lotuses, Microsofts and Ashton-Tates. But its chances of making it in that way can’t be better than 50-50. Aldus is the classic sardine stock: like the mythical can of oily fish, it is a commodity for buying and selling, and not for eating – or for tucking away for a rainy day.
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