Exide Electronics' goal: may the circuit be unbroken.

• Position: On the Market - Company profile

Exide Electronics' goal: May the circuit be unbroken

Electricity is to computers as the Nile River is to Egypt: Too much of either equals disaster - and so does too little.

To deal with the vagaries of the river, Egypt built the Aswan Dam. To control the highs and lows of electricity - brownouts and power surges - Exide Electronics Group builds uninterrruptible power-supply units. That's UPS, for short. Raleigh-based Exide(XUPS-NASDAQ), a leading manufacturer, offers UPS units in all sizes - from small, $400 boxes that fit snugly under your PC to big, room-size units that cost $129,000 or more.

In simple terms, Exide's UPS machines are essentially big batteries connected to the power supply (the wall outlet or the utility junction box) and the computer or communications console. A few electronics switches in the UPS turn alternating current into direct current and then back again.

When the power surges or ebbs, the UPS acts as a buffer, blocking the distortion. When it goes out, the UPS battery keeps the computer operating long enough for you to shut it down properly.

Given the dramatic growth in computer use, you would think that there would be an uninterruptible demand for shares of a company whose devices keep power flowing. But Exide Electronics has had its share of market surges and sags since it went public in December.

The company and a small group of early investors sold 1.2 million shares at $12.50 each. Soon after the IPO, Exide reported disappointing first-quarter earnings, and within a few weeks, the price had dropped to about $8.50.

In its prospectus, Exide and its underwriters, Alex. Brown & Sons of Baltimore and Donaldson, Lufkin & Jenrette of New York, had warned investors that first-quarter earnings would decline. Exide's first quarter, October through December, has traditionally been its weakest. It does a fair amount of government business, and governmental bodies are just starting their fiscal year in October and often haven't settled on spending for computer components.

Still, worried investors dropped the stock. After a winter recovery - back to the IPO price - Exide's stock sagged again in April on news that it had lost a $15 million lawsuit filed by a former sales rep who claimed he had been cheated out of a commission. Wall Street knocked the stock price down $3, reducing market capitalization by $515 million.

Exide is appealing the decision. It says the sales agent was fired two years before the contract he had...