Revenue, Profits Recover at Top Public Companies
By MICHAEL LYSTER
Orange County’s 50 largest publicly traded companies grew sales last year and turned a collective loss into their first profit since 1999, according to this week’s Business Journal list.
The results,a 6% rise in 2003 sales to $80.4 billion and net income of $2.3 billion, versus a $1.2 billion 2002 loss,come amid the economic recovery and after years of restructuring at many companies.
The list ranks the largest public companies based here by sales for the most recent four quarters, most through Dec. 31.
With the rebound in sales and profits, there’s just one piece of unfinished business: jobs.
Employment at the companies fell by 5% in the past year to 218,888 workers worldwide. In OC, the companies shed 531 jobs, a 1% decline, for a total of 35,328 local workers.
That employment is lagging improved sales and profits isn’t surprising. Many of the companies on the list have been cutting jobs to bring costs in line with business that slumped during the downturn.
As such, the companies aren’t likely to add jobs until they have several quarters of gains under their belts.
No. 3 Fluor Corp., the Aliso Viejo-based engineering services company, saw the most dramatic employment decline, shedding nearly 15,000 jobs for a 32% decline. In OC, Fluor cut 1,121 jobs, a 43% drop, for a total of 1,458 local workers.
Fluor has been adjusting to a decline in oil, gas and power work, according to company spokeswoman Leann Vandergrift.
Rebuilding projects in Iraq and other government work is growing for Fluor (see related story, page 1). The company has won a handful of sizable Iraq contracts, some with British partner AMEC PLC.
No. 1 Ingram Micro Inc., the Santa Ana technology products distributor, also did its share of cutting in the past year. Company-wide, Ingram’s headcount fell 11% to 11,300 people and by an estimated 7% to 1,250 OC workers.
The cuts mark the tail end of a makeover Ingram started in 2001 when the bottom fell out of the technology sector. Ingram since has cut nearly 5,000 jobs worldwide.
Restructuring also led to big job losses at other companies.
No. 18 Irvine-based Sun Healthcare Group Inc. cut employment by 19% to 11,282 people overall and by 54% to 333 OC workers. The operator of nursing homes and other healthcare facilities emerged from a three-year bankruptcy in 2002 and has been selling operations.
No. 19 Valeant Pharmaceuticals International, the Costa Mesa drug maker formerly known as ICN Pharmaceuticals Inc., cut 61% of its global workforce for a total of 4,437 people. Local operations jumped 274% to 378 workers after Valeant re-absorbed Ribapharm Inc., which added about 130 workers back to Valeant.
Ribapharm ranked No. 40 on last year’s list after ICN spun off 20% of the biotechnology drug maker in 2002.
In the past year and a half, Valeant’s new management has pared factories and pulled out of far-flung markets.
No. 44 Powerwave Technologies Inc., a Santa Ana maker of amplifiers for wireless networks, cut its workforce by 55% to 448 people, with the ax falling hardest in OC. Powerwave cut 555 jobs in Santa Ana after moving production to Asia.
Already, though, there are signs employment is picking up at the companies. Thirty-five reported higher companywide employment, while 10 showed job losses. Five reported no change.
In OC, 30 companies added workers while 16 cut and four reported no change.
Job cuts and other moves helped the companies return to a net profit after posting collective losses for the prior three years.
The top two companies, Ingram Micro and No. 2 Cypress-based PacifiCare Health Systems Inc., played a big role in the about-face.
Ingram saw 2002’s $275 million loss give way to $149 million in net income last year as the tech sector rebounded and cost-cutting moves took hold.
The story was similar at PacifiCare, a provider of healthcare insurance plans. The company went from a $758 million loss in 2002 to a $243 million profit last year, thanks to higher premiums, new plan offerings and the paring of unprofitable plan subscribers.
The other companies on the list didn’t get any help from No. 9 Broadcom Corp., which moved into the top 10 from No. 12 last year.
The Irvine chipmaker posted a $960 million net loss, which was down from 2002’s $2.2 billion loss. But the figures, which include the cost of stock options, write-downs, legal settlements and other items, mask what was a good year for Broadcom.
Sales rose 49% to $1.6 billion, while Broadcom’s profit before charges and other items was $151.7 million, versus a loss of $54.4 million a year earlier.
Real Estate Surge
Higher sales were the other part of the equation in the group’s return to profitability last year. The companies grew sales at twice the pace seen on last year’s list. Real estate players led the charge.
No. 4 Santa Ana-based First American Corp. saw revenue surge 32% to $6.2 billion. The company, which provides title insurance and other business services, saw another year of stepped up demand from new and refinanced mortgages.
Standard Pacific Corp. of Irvine, No. 6 on the list, also saw a big jump thanks to the hot housing market. The homebuilder’s revenue rose 25% to $2.4 billion.
Impac Mortgage Holdings Inc., a Newport Beach-based company that originates and invests in mortgages, saw a 75% jump in revenue to $435 million. That helped Impac move up 17 spots from 46 last year to 29 this year.
The top 10 saw one notable change,the departure of Fidelity National Financial Inc., which ranked No. 4 last year. Fidelity came off the list after moving its headquarters from Irvine to Florida last year. The title insurer still has operations in OC.
The move allowed Fidelity’s rival First American to move up a notch to No. 4. Lake Forest-based disk drive maker Western Digital Corp. also moved up one spot to No. 5. Western Digital grew sales 19% to $2.9 billion last year.
After Broadcom’s leap into the top 10, Standard Pacific showed the next biggest jump in the top tier, moving up two spots from No. 8 last year.
Besides Ribapharm and Fidelity, a couple of other companies on last year’s top 50 aren’t there this time around.
Conexant Systems Inc., the chipmaker formerly based in Newport Beach, ranked No. 18 on last year’s list. It came off this year after March’s $1.2 billion buy of Red Bank, N.J.-based GlobespanVirata Inc. and a shift in its headquarters to New Jersey.
An even bigger deal claimed Sicor Inc., the generic drug maker that ranked No. 28 last year. Israel’s Teva Pharmaceutical Industries Ltd. bought Irvine-based Sicor in January for $3.3 billion.
Change already is in the works for this year’s list. Gateway Inc., the Poway-based computer maker, plans to move to OC, likely the Irvine Spectrum, after buying Irvine-based eMachines Inc. last year.
With 2003 sales of $3 billion, Gateway would rank No. 5 on this year’s list just ahead of Western Digital.
