(FORTUNE Magazine) – AGING AIRCRAFT GIVE MAINTENANCE FIRM A LIFT

The average commercial airplane flying today is 13 years old, and its engine needs constant upkeep and repair. Greenwich Air Services maintains and refurbishes gas turbine engines for Continental Airlines, UPS, and the U.S. Air Force. The company, with headquarters at Miami International Airport, also services turbine engines used for power generation and oil transport. Net income over the nine months ended June climbed 71%, to $4.2 million, on revenues of $134 million, and last quarter's earnings exceeded analysts' expectations by about 10 cents a share.

Greenwich gains efficiencies through economies of scale. "Our cost of doing business is less than the airlines'," says President Eugene Conese Jr. A new computer system reduces overhead by tracking parts and delivering crucial information directly to repair crews. Most cargo and commuter airlines don't have the wherewithal to care for their own engines, and a growing number of major carriers contract out their engine maintenance because it frees cash tied up in inventory and equipment. Greenwich has more than 60% of its assets in inventory, allowing it to service engines and return them to customers quickly. The latest round of announced military base closings may precipitate more business as well, since the Air Force is likely to be operating fewer of its own maintenance facilities.

A BRIGHT SPOT IN APPAREL

Probably best known for its sweaters with holiday motifs that retail for as much as $175, Marisa Christina is expanding into knit suits for women. The New Hyde Park, New York, company is also bringing out a line of elegantly casual clothing targeted at a cohort slightly younger than the suburban moms who are already loyal customers. Repeatedly meeting or beating analysts' expectations, CEO Michael Lerner saw earnings rise 55% in the past six months, to $2.9 million, on sales of $31 million. The stock is also on the move, from $11 in May to about $17 in late August. Margaret Whitfield, an analyst at Hancock Institutional Equity Services, says Marisa has "a very strong core business with major potential to break into new accounts."

CEO Lerner maintains gross profit margins of around 40% by catering to upscale clients through retailers such as Nordstrom and Talbots. Inventory is kept tight. Garments are generally not knitted or dyed until they have been ordered. Lerner further reduces risks by trying to create styles that are timeless. "I make clothes, not fashion," he says. Lerner is building a war chest of cash that should top $20 million by the end of this year, and he is on the prowl for acquisitions. His last one was in 1993, when he purchased children's clothier Flapdoodles, which now accounts for about a third of revenues. A swimsuit or summer specialty-clothing company would complement Marisa quite well.

A CHIP OFF THE OLD CD-ROM

The number of CD-ROM drives shipped this year will be triple the amount shipped just two years ago and, according to the market research firm Disk/Trend, that figure should nearly double again by 1998. Riding this multimedia wave is Oak Technology, which makes most of the semiconductor chips that control CD-ROM drives in personal computers. In the fiscal year ended June, revenues swelled 160%, to $111 million. Profits, at $21 million, multiplied nearly sixfold. The Sunnyvale, California, company traded at about $20 when it went public in February and recently reached $45. Needham & Co. analyst Raj Rajaratnam sees it at $60 within a year.

While CD-ROM controller chips will eventually become more of a commodity, Oak is gearing up a whole slew of multimedia chips to keep profits churning--including controllers for higher capacity, higher performance, and even recordable CD-ROM drives, as well as chips for video decompression, 3-D graphics, and video acceleration. In 1996 its chips will also be in set-top boxes and CD-video players.

Oak's worst competition may be itself. "When we can't keep up with demand, that is when we will start losing customers," says CEO David Tsang. He aims to more than double Oak's capacity by next year. To secure an ample supply of silicon, he constantly negotiates with the major chip foundries in Japan, Taiwan, and Korea. "This is a relationship game," notes Rajaratnam, "and Tsang has good relationships in the Far East."