TURBODYNE STOCK IN TAILSPIN.Byline: Ben Sullivan Daily News Staff Writer Shares in Turbodyne Technologies Inc. plunged Tuesday, losing more than a third of their value, after a well-known short-selling investor declared the firm grossly overvalued Overvalued A stock whose current price is not justified by the earnings outlook or price/earnings (P/E) ratio and thus, expected to drop in price. Overvaluation may result from an emotional buying spurt, which inflates the market price of the stock or from a deterioration in a and accused company officials of fraud. The maker of pollution-reduction equipment for automobiles saw its market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. drop by 37 percent, or $171.2 million, as shares dropped from $15.8125 to $10 in a day of heavy trading. At one point Tuesday, Turbodyne shares were down 64 percent. The company has lost 41 percent of its value since Friday when shares closed at $17. Tuesday's drop came in response to a press release issued by Asensio & Co., a New York-based brokerage that specializes in short selling Short Selling The selling of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller. Short sellers assume that they will be able to buy the stock at a lower amount than the price at which they sold short. . Short sellers, betting that a company's stock will fall, borrow shares, sell them and then replace the shares later with ones they hope can be bought at a lower price. If the shares do fall, the short seller gets to keep the difference. In a blistering statement, Asensio said Turbodyne management purposely had misled investors about the value of its core technology ``in order to defraud To make a Misrepresentation of an existing material fact, knowing it to be false or making it recklessly without regard to whether it is true or false, intending for someone to rely on the misrepresentation and under circumstances in which such person does rely on it to his or investors.'' Further, Asensio said Turbodyne has raised and spent $55 million in equity capital but has failed to create any new products or generate significant sales. ``We believe this gross overvaluation o·ver·val·ue tr.v. o·ver·val·ued, o·ver·val·u·ing, o·ver·val·ues To assign too high a value to: overvalued the painting. combined with Turbodyne's complete inability to generate any earnings per share will cause the stock to fall to well below $1 per share,'' the statement said. Asensio initiated coverage of Turbodyne on Tuesday with a ``strong sell'' recommendation. Turbodyne officials could not be reached for comment Tuesday though a representative said the firm would issue a response by the end of the business day. No announcements were made. Turbodyne spokesman Sven Urbas told Bloomberg News that Asensio had ``no grounds for this attack. . . . This is an obvious strategy to manipulate the market and profit from short selling.'' Neal Kolhaas, a principal at CSK CSK see chronic superficial keratitis. Securities in San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden , said the claims against Turbodyne are unfounded. CSK manages 30,000 shares of Turbodyne stock for CSK's personal account. ``This guy has been campaigning against Turbodyne for a long time,'' Kolhaas said. ``Yes, the company has yet to generate earnings but it is on track to do so in 1999.'' Last month John Singleton, Turbodyne's former chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. and chief financial officer, resigned from the company five months after he started. Though the company has signed a string of contracts with European cities recently to provide municipal-bus retrofit ret·ro·fit v. ret·ro·fit·ted or ret·ro·fit, ret·ro·fit·ting, ret·ro·fits v.tr. 1. To provide (a jet, automobile, computer, or factory, for example) with parts, devices, or equipment not in equipment, it continued to lose money in the first two quarters of 1998. CAPTION(S): Chart CHART: ROUGH RIDE Shares of Turbodyne Technologies Inc. fell as much as 64 percent Tuesday before a late rally. Monday close: $15.8125 Tues. close: $10 SOURCE: Bloomberg News Daily News |
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