Tuesday, May 22, 2018
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OC shareholders unlikely to take comfort in others' similar misery

When Owens Corning's stock recently sank below $5 a share, and then below $4 a share, many shareholders undoubtedly were sick to their stomachs.

It may be small consolation to them that they're not alone. This selective bear market has sent stocks of many famous-name companies reeling.

Most of the stock indexes are below water for the year, although only the Nasdaq is technically in a "bear" market (more than 20 per cent below its peak). The Nasdaq is about 26 per cent off its high. And for the year so far, the Nasdaq is down 8 per cent, the Dow Jones industrial average is down 6 per cent, and the Standard & Poor's 500-stock average is down just 2 per cent.

And yet there's a lot of pain for some shareholders. Numerous stocks that once were high fliers are now selling for low single-digit prices - and some are going for pennies per share. Some stocks dropped 70 per cent, 80 per cent, or even 90 per cent in recent months.

Take Owens Corning for example.

Because of investor concerns over asbestos liability and earnings projections, Owens Corning's stock has hit one 52-week low after another. It closed yesterday at $3.50 on the New York Stock Exchange, 85 per cent below its 52-week high of $24.

But the pain goes deeper than that. Owens Corning's high for 1999 was $43.75. Its historic high was $82.50 a share - in 1986, just before it recapitalized to stave off a hostile takeover bid.

Even so, Owens Corning is far from unique. Consider the poor shareholders of AMF Bowling, the world's largest bowling-alley operator. Their stock was selling for $31 a share two years ago but sank to 19 cents by yesterday. The firm is mired in debt and has been trying to dodge bankruptcy.

And how about the hapless shareholders of Rite Aid? For them it has been a steady stream of bad news - disastrous losses, growing debt, and finally removal from the S&P 500 index. Rite Aid closed yesterday at $3.19, down 94 per cent from its 1999 high of $51.13.

Then there's Sunbeam Corp. At one time, stock of the maker of small appliances and household products sold for more than $50. Not anymore. It closed yesterday at $1.63 a share. Accounting irregularities sent Sunbeam's stock crashing to $7 two years ago and led to the firing of its chairman, "Chainsaw" Al Dunlap. But its stock has continued to fall, partly because of losses from its Mr. Coffee machines and Coleman outdoor equipment operations and run-ins with its creditors.

Some of companies' troubles seems to run in packs. For example, steel is hurt by foreign competition. LTV Corp.'s stock, over $21 at one time, is now $1.63 a share. Weirton Steel's shares, once over $15, have dropped to $2.63.

Some textile and fabric firms face hard times too. Burlington Industries dropped from nearly $19 a share to just $1.25 in the last two years, and Dan River, Inc., fell from $21.50 to $4.25 in the same time frame.

Theater chains are hurting too. Loew's Cineplex Entertainment went from nearly $13 a share down to $1.81 within the last year, and Carmike Cinemas plunged from $53.50 in 1999 to just 88 cents a share yesterday.

Some insurance companies were especially hard-hit by liabilities and class-action lawsuits. Reliance Group Holdings stock fell from $19 to 17 cents in the last two years; Frontier Insurance Group dropped from nearly $26 to 81 cents, and Fremont Holdings fell from $26 to $3.25.

And, of course, many of the high-flying dot-coms crashed back to earth in the last year. Among them: drkoop.com (Internet health software), from $45.75 down to $1.35; Fogdog Sports (an online retailer), from $22 to 97 cents; InterWorld Corp. (e-commerce software), from $93.50 to $3.97; and InsWeb Corp. (online insurance marketing), from $44 to $2.

In its first day on the stock market late in 1998, theglobe.com, an Internet services provider, traded as high as $97 a share. It closed yesterday at $1.09, down 97 per cent from its split-adjusted high of $42.75 last year.

On and on it goes. But Owens Corning's shareholders probably won't feel any comfort from the misery of shareholders of other firms. They would rather see their own stock return to normal.

Homer Brickey is The Blade's senior business writer.

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