Jeweler chases a Taylor-made success story.

For the Abramov family of Los Angeles, jewelry has been a family business for 30 years.

Until Elizabeth Taylor and Kathy Ireland came along, that is. Now, the celebrities have control of the business.

Run by brothers Jack and Monty and founded by their late father in 1974, Techline Jewelry Corp. operated out of the downtown jewelry district and made a name for itself with its designs; its "Mirabelle 18K" diamond-encrusted handbags have adorned celebrity clients such as Julia Roberts.

In fact, the bags were so striking they caught the eye of famous diamond lover Taylor, who had brushed off past opportunities from the likes of Van Cleef & Arpels to trade on her name.

Yet when she saw Techline's handbags, she decided to toss her tiaras in with the Abramovs--followed shortly by Ireland, a former model who has built a big business with her branded line of furnishings, clothes and other products aimed at working mothers.

Now, Techline, which grossed just $8.5 million in 2004, has set its sights much higher. It's morphed into the publicly traded House of Taylor Jewelry Inc. with an "Elizabeth" line of jewelry that includes some pieces that cost as much as $1 million, a house brand with prices up to $25,000 and a Kathy Ireland line aimed at middle-class consumers.

While the brothers still run the company, the transformation has come at great cost.

In exchange for the use of Taylor's and Ireland's name, the duo ceded control of the firm to their two celebrity partners, who also receive undisclosed royalties. (Taylor owns 36 percent of outstanding shares and Ireland's Sandbox Jewelry LLC has 18 percent.) Meanwhile, the brothers, who along with their mother, own about a quarter of the shares, have learned a few lessons about life on Wall Street.

Citing high start-up expenses, House of Taylor has reported rising sales but has yet to report a profit and has been punished for it. Its shares have dropped 67 percent to $2 since they were listed on the Nasdaq in March for $6.

"It's been incredible and it's been an amazing challenge," acknowledged chief executive Jack Abramov. "(But) for a jewelry company to have Elizabeth Taylor license their project ... she's to jewelry what The Beatles are to music."

Computer assisted jewelry

Techline Jewelry's origins were in a modest gold import and trading firm opened in 1974 by the late Raphael Abramov and his wife Rachel.

The sons got into business with their father in 1989 after finishing school and the family formed RJM Manufacturers in the heart of downtown's jewelry center, specializing in 18 carat gold and platinum jewelry using diamonds and other precious stones.

Techline was formed in 2000, when the family started using computer assisted design in developing new pieces of jewelry. That led to the "Mirabelle 18K" brand and a much higher profile for the company. Celine Dion was a client, and Monty Abramov designed Elton John's famous, jewel-encrusted red piano.

Jack Abramov said the company couldn't turn down the opportunity presented by Taylor, who garnered worldwide headlines in 1969 after receiving a nearly 70 carat diamond from husband Richard Burton--even though it meant giving up family control.

"What name do you associate more with jewelry than Elizabeth Taylor?" he said.

Indeed, Taylor has one of the largest and most valuable private jewelry collections in the world. And even wrote a bestseller titled "My Love Affair with Jewelry."

Taylor was not available for comment, but the company said the actress is highly involved in creating her collection, which includes rings, necklaces, earrings and bracelets. Taylor meets with chief designer Monty Abramov once a week to work on new pieces.

The company's offering now include its "Elizabeth" line starting at $3,500 and including ultra-luxe jewels valued at $1 million. A mid-range House of Taylor line has a price point of $3,000 to $25,000 and Ireland's line is priced from $200 to $3,000.

Something sparkling

Ireland got hooked up with the company after finding out about Taylor's involvement from a business associate who knew Taylor's creative director. (Kathy Ireland Worldwide boasts its branded products, sold in such mass retailers as Costeo Wholesale Corp., rang up $1 billion in sales last year.)

"(My customers) have been telling me they need something special and sparkling," Ireland said. "For me it's an area where I have a lot to learn and who better to learn from than Dame Elizabeth Taylor?"

The business plan is simple. The privately held Techline was a respected name in the jewelry world and sold its wares mostly in high-end independent retailers such as Gearys in Beverly Hills, but it had fewer than 200 outlets.

Now that it has attached its fortunes to Taylor and Ireland, it hopes to sell its House of Taylor line at 1,000 independent jewelry stores with the Kathy Ireland line in thousands more. The high-end Elizabeth line is planned for just 25 high-end boutiques, such as KC Kroenberger just outside New York. Each major international city isn't likely to get more than one location.

Kim Picciola, a retail analyst for Morningstar Inc. said creating a brand attached to stars such as Taylor and Ireland can assist a company in an extremely competitive jewelry industry--but there are no guarantees.

"We have people like Wal-Mart or Costco--the value kind of retailer is getting into the jewelry industry. You really have to have unique design or incredible brand to make a niche for yourself, to create a stable position. Otherwise, the competition is incredibly fierce," she said, adding that many morn and pop retailers are getting squeezed out of the market.

House of Taylor thinks it has an advantage because retailers that buy the line can use Ireland and Taylor photos for their store promos.

"How much would it cost for a retailer to have Kathy Ireland or Elizabeth Taylor to promote their store? They wouldn't be able to afford it," asked Jack Abramov. So far, though, the public company has posted less-than-stellar results.

House of Taylor didn't benefit from a widely publicized initial public offering; rather it went public through a low-cost, under-the-radar reverse merger with a non-operating corporate shell called Nurescell Inc. in July 2005.

And the company has consistently posted net losses, which hit $2.1 million in the first quarter ended March 31. Most recently the losses were cut to $290,000 for the second quarter ended June 30, narrowed from $487,000 in the same quarter the year before.

The company maintains that the losses are due to rollout costs, and points to a three-fold, second-quarter sales increase. Net sales were up to $2.5 million from $809,000 in the year-earlier period.

"The official corporate policy is not to comment (on these results)," said Jack Abramov. "But I feel that we're just beginning to unearth the tremendous potential in House of Taylor Jewelry."

For Gearys owner, Thomas J. Blumenthal, that sentiment rings true. Blumenthal's 76-year-old store has bought from the Abramovs for decades.

He is the third generation family member to own the retail outlet and he said the company's new lines, which he's been carrying for about 18 months, are selling better than expected.

"Obviously the connection with Elizabeth Taylor is really terrific," he said. "She's doing the designing herself and it's very different than anything else we carry. Customers are very excited about it. She's got such a history with jewelry with all the people who have given her jewelry over the years."

House of Taylor Jewelry Inc. (Nasdaq: HITJ)

YEAR (Dec. 31)                  2005   2004

Revenue (millions)              $5.6   $6.4
Total Expenses (millions)       9.95   5.79
Operating Income (millions)   (4.34)   0.63
Net Income (millions)         (3.53)   0.41
Earnings Per Share            ($.10)   $0.0

SUMMARY

Business: Celebrity-branded jewelry manufacturer

Headquarters: West Hollywood

CEO: Jack Abramov

Market Cap: $75 million Dividend Yield: N/A

Total Liabilities: $4.3 million P/E Ratio: N/A

Long-Term Debt: $480,000

Note: Table made from bar graph.