Smith & Wesson Stock Rebounds, Despite Consumer Boycott

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Smith & Wesson Stock Rebounds, Despite Consumer Boycott By Matt PyeattCNSNews.com Staff WriterMarch 22, 2002(CNSNews.com) - 17 months after gun maker Smith & Wesson Corp. laid off more than a hundred workers from its Springfield, Mass. plant in the middle of a consumer boycott, the company's new owners this week watched their stock hit an all-time high. Smith & Wesson Holding Corp. is the new name of the company since an American firm, Saf-T-Hammer Corp. purchased the British-owned Smith & Wesson last May. Company officials say the surge in the stock price - it closed Wednesday at the all-time high of $2.84 -- is because of that new American ownership. But Larry Pratt, executive director of Gun Owners of America, said an agreement between the previous Smith & Wesson owners and the Clinton administration over a series of gun restrictions caused the merged company "permanent damage." And Pratt suggested the Smith & Wesson Holding Corp. stock price is probably higher only as a result of the nation's surge in gun sales since the Sept. 11 terrorist attacks.Everyone agrees it was Smith & Wesson's deal with the Clinton administration in March of 2000 that produced the consumer boycott. The agreement provided Smith & Wesson immunity from federal product liability lawsuits in exchange for the gun manufacturer agreeing to equip its weapons with trigger locks and smart gun technology, including "ballistic fingerprints," which help detect which bullets are fired from which guns. Smith & Wesson also agreed to force its dealers to run background checks on gun purchasers.Gun rights activists immediately blasted the agreement as another attempt to restrict gun ownership and launched a boycott against Smith & Wesson.Ken Jorgenson, director of marketing and communications for Smith & Wesson, acknowledged this week that the boycott "obviously" hurt the sale of the products manufactured. "It had a major impact on the business," Jorgenson said. "One of the issues we had in some places was that some people wanted to buy the product but couldn't find a dealer that would carry it."The financial turnaround began last May, following the merger, according to Bob Scott, president of Smith & Wesson. "The continued improvement in sales, margins and profitability is clear evidence of the effectiveness of our business model," Scott said.Mitchell Saltz, chairman of the new Smith & Wesson Holding Corporation, also believes "the return of Smith & Wesson to American ownership has had a very significant impact on sales." However, Pratt said the negative impact of Smith & Wesson's agreement with the Clinton administration is still being felt."I think they've done themselves some permanent damage. We had certainly encouraged people at the time not to buy Smith & Wesson. It would be like feeding the hand that is biting you," Pratt said. "My guess is that the desire not to buy Smith & Wesson still remains among a lot of gun owners. I still see gun owners refer to the perfidy of the Smith & Wesson Company at that time."Pratt pointed to the fact that Saf-T-Hammer Corp., the company that acquired Smith & Wesson, manufactures trigger locks."Presumably, they are still continuing their research on an integral gun lock, which we are very concerned about because we think that could end up having people put in great danger," he said. Those gunlocks, according to Pratt, might make it impossible for a wife to operate the gun her husband had left her for self-defense."She could die because she couldn't operate the gun," Pratt said. "So, we think there is some real bad judgment in this whole direction. For these companies to pursue that, we just don't want to play ball on that."Smith & Wesson's sales have increased, likely as a result of the post-Sept. 11 events, Pratt said. "Nine-eleven certainly could have had more people buying guns, and because there were a lot of first time gun buyers, they may not have had the same information about Smith & Wesson and their willingness to sign a disastrous contract with President Clinton that would have basically registered all guns and enabled the government to greatly restrict gun sales," Pratt said.The Smith & Wesson Holding Corp. stock price closed on Sept. 10, 2001, the day before the terrorist attacks, at 86 cents a share. Following the attacks, the stock market was closed for several days and re-opened on Sept. 17. Smith & Wesson Holding Corp. was one of the few companies to see its stock climb that day - it closed at 95 cents a share. The stock began surging last month and closed Wednesday at $2.84 per share. http://www.cnsnews.com/ViewBusiness.asp?Page=\Business\archive\200203\BUS20020322a.html