BUY, BUY TO SLUMPING LOCAL ECONOMY; SOUTHLAND COMPANIES TO ACQUIRE BUSINESSES.

Byline: Gregory J. Wilcox Daily News Staff Writer

The share price of two San Fernando Valley-area companies soared Monday with the announcement they would be making multimillion-dollar acquisitions, a sign of more good economic news for the region.

Economists said these kinds of deals demonstrate a new economic vitality for the region. They're also a good way for companies to expand their business and improve their bottom line.

``It's certainly a good time to get financing for profitable companies like this and a real opportunity in terms of market receptiveness to new business ventures,'' said Tom K. Lieser, associate director of the UCLA Business Forecasting Project. ``California is a great growth market right now.''

The deals announced Monday were:

Van Nuys-based Electro Rent Corp. will spend $320 million in cash for the computer and test and measurement equipment rental businesses of GE Capital Technology Management Services, a division of GE Capital Services. The deal is expected to close by Oct. 31.

Newbury Park-based Semtech Corp., a semiconductor manufacturer, said it would buy Edge Semiconductor of San Diego for 750,000 shares of stock. Based on Monday's closing price, the deal would be valued at $50.6 million.

News of the deal propelled Electro Rent's stock to 33-1/4, up 5-1/4 - or 18.75 percent - from Friday's close. Semtech's stock closed at 67-1/2, up 4-5/8, a 7.36 percent jump from Friday.

Electro Rent, with 500 employees, has a net worth of more than $140 million. The company rents and leases personal computers, workstations and general-purpose electronic test equipment to a variety of businesses.

Company chairman Daniel Greenberg said Electro Rent weathered the economic battering California absorbed earlier in the decade because a greater number of businesses began using personal computers during that time.

``Over the last five years the company has been highly profitable, making close to $80 million,'' Greenberg said. ``I don't think this has been a tough time for our kind of business.''

During fiscal 1997 Electro Rent earned $24.1 million, or $1.94 per share, on revenue of $150.5 million. In the prior fiscal year, the company generated net income of $21.6 million, $1.75 a share, on revenue of $141 million.

A balance sheet like Electro Rent's made it easy to obtain a loan to buy the bigger business unit, Greenberg said.

He declined to say how many people work at the new unit or if it would continue to be based in Atlanta. GE officials declined comment.

Meanwhile, Semtech is taking a $50 million gamble on growth expected in the segment served by Edge Semiconductor, which makes products for equipment used in testing semiconductors.

``It hasn't been growing but it is forecast to grow dramatically over the next three or four years as manufacturers have to upgrade their equipment,'' David G. Franz Jr., Semtech's vice president and chief financial officer, said of Edge's market niche.

``The rapid transition to the next generation of semiconductors now being developed . . . is bringing greater volume to the market,'' he said.

Semtech has about 530 employees. Edge Semiconductor has about 30 employees and will continue to be based in San Diego.

``As we continue to strive to grow the business aggressively they will be adding (workers) at that location,'' Franz said.

Analyst Douglas Lee at Montgomery Securities in San Francisco said Semtech is a leader in making chips used to power up microprocessors and protect other chips from voltage spikes.

The deal is a good match because Semtech is expanding its product line while maintaining some synergies with the core business.

``It was a very smart acquisition on (Semtech's) part,'' Lee said. ``With this deal, (Semtech's) earnings should go up.''

John Rooney, president of the Valley Economic Development Center in Van Nuys, said acquisitions are a good way for a company to strengthen the bottom line.

``A lot of the tech companies are starting to grow and midsized companies and even smaller ones use acquisitions to grow,'' he said. ``What it says is these companies are optimistic about their market segment and they feel that this is a good way to expand and acquire talent.''

CAPTION(S):

4 Photos, 2 Charts

Photo: (1) Chips made by Semtech Corp. power up microprocessors and protect other chips from voltage spikes.

(2--Color) Electro Rent Corp., under Chairman Daniel Greenberg, rents and leases personal computers, workstations and other equipment.

John McCoy/Daily News

(3) David G. Franz Jr., Semtech's vice president and chief financial officer, holds a silicon wafer with power ICs in the wafer probe room.

(4) Semtech Corp., based in Newbury Park, makes semiconductors.

Bob Halvorsen/Daily News

Chart: (1-2--Color) BULLS IN THE VALLEY

The stock price of two local companies - Semtech Corp. of Newbury Park and Electro Rail of Van Nuys - has risen dramaticlly. Semetech's increase has been steady all year, while most of Electro Rent's growth has come this month.