Obsolete Operation

Fortnight ago young Robert Ellsworth Gross, president of Lockheed Aircraft Corp., published an unaudited preview of his 1939 annual report: sales, $35,303,444, up 244% from 1938; net earnings in excess of $3,140,000 ($4.05 a share), up 610%; unfilled orders over $40,000,000 (they jumped to $70,000,000 last week). Bob Gross's preview was incidentally a potent sales talk for an operation that took place last week. It was a type of operation that has threatened to become obsolete: a public offering of common stock to obtain new capital.

Last week the sales talk produced sensational results. A Manhattan syndicate, offering 225,000 shares of Lockheed common at $28.50 a share, was able to close its books before 10 a. m. The shares had gone like gas masks before an air raid. The issue was oversubscribed five times.

To Lockheed went a net of $5,737,500, of which $1,750,000 will be used for new tools and machinery, assembly hangars and a research laboratory, the balance for working capital. To underwriters and their dealers went $675,000 for expenses, profit, and risk of the operation. It looked as if the risk of finding no takers for offerings of common stock might be considerably smaller than Wall Street has believed in recent years.

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