Orange County’s largest public companies saw nearly $26 billion in market capitalization wiped away in the first quarter.
The Business Journal’s OC Billion Dollar Club, an index of 23 OC stocks with a market value of more than $1 billion, lost half of its value in the first three months, dropping 52%. The decline erased $25.7 billion in market value at companies such as Irvine-based Broadcom Corp., Costa Mesa-based Emulex Corp. and Santa Ana-based Powerwave Technologies Inc.
“A lot of companies underperformed relative to expectations,” said Stephen Fillet, executive director in the investment banking department of CIBC World Markets in Newport Beach.
The OC 50, an index of 50 smaller public companies, fared better in the first quarter. With gains at Lake Forest-based Western Digital Corp., Santa Ana-based Microsemi Corp. and others, the market value of the OC 50 gained nearly $500 million, or 3%, to end the quarter at $14.7 billion.
Technology companies led the drop in the Billion Dollar Club. According to Fillet, tech stocks have been highly overvalued compared to historical standards and last year’s decline and the fall in the first quarter merely corrected the overvaluation.
“About a year ago those valuations changed and they are still changing,” he said.
Some of the biggest first-quarter decliners among OC stocks were Broadcom, Emulex, Irvine-based Newport Corp., and Powerwave. Shares in those companies declined by 55% or more during the first quarter.
Shares of chip maker Broadcom, which only a few months ago was OC’s most highly valued company, were down 62% in the first quarter. The plunge eroded $11 billion in Broadcom’s market capitalization. The company now ranks second in market value to Irvine-based Allergan Inc., a specialty pharmaceutical maker. Almost 40% of the decline in the Billion Dollar Club was on account of Broadcom.
But while the OC technology sector saw continued turmoil in the first quarter, there were stocks that did well during the first three months. In the Billion Dollar Club, eight of the 23 stocks were up. The average stock price was lower only by about 16%.
Some of the stocks that gained were Anaheim-based Pacific Sunwear of California Inc., Foothill Ranch-based Oakley Inc., Santa Ana-based Ingram Micro Inc. and Aliso Viejo-based Fluor Corp. Stocks of the eight climbers in the Billion Dollar Club averaged a gain of 17.4%.
The breakdown in the OC 50 was a mixed bag. Some of the companies making up the index saw impressive gains. Twenty-five out of the 50 companies posted an increase in their share price during the first quarter, and 17 of those companies rose by 15% or more.
Huntington Beach-based Quiksilver Inc. and Santa Ana-based PacifiCare Health Systems Inc. were some of the top gainers during the period. One company that went public late last year,Orange’s Sybron Dental Specialties Inc.,posted an eye-catching 23% gain in the first quarter. Another company that went public late last year, Costa Mesa-based Resources Connection Inc., was down 23% for the first three months. But more recently shares of the professional services firm have surged and are up 43% from their debut. n
