Ugly Quarter for Local Stocks
By RAJIV VYAS
It was a bloodbath for Orange County stocks in the second quarter.
Worst hit,surprise,were technology stocks. The Business Journal’s index of 20 technology companies lost a staggering 40%, or $14 billion, of market value in the quarter.
The Business Journal’s Billion Dollar Club saw about 13%, or $8 billion, of market value disappear. The Billion Dollar Club is an index of 24 companies with market values greater than $1 billion.
OC companies obviously weren’t alone suffering falling stock prices. The Nasdaq fell 21%, while the Dow Jones Industrial Average was off 11% in the quarter.
And the OC 50 index, which is made up of small and midsize stocks by market value, wasn’t immune to the down market. The 50 stocks together lost $1.7 billion or about 10% of their value. The decline in the OC 50 follows its trend-breaking gain of 7% in the first quarter, when the other two indexes fell.
Thirteen of the 24 stocks in the Billion Dollar index posted a decline in market value, with Irvine-based Broadcom Corp. leading the way down. Broadcom lost a staggering $5.3 billion, or 52%, of its market value in the quarter.
Rival chipmaker Newport Beach-based Conexant Systems Inc. also saw a huge decline in market value. Conexant lost $2.7 billion of value and has fallen off the index because its market value of nearly $700 million as of last week is below the $1 billion cutoff.
Conexant spun off its wireless chip business at the end of the quarter into a venture with Woburn, Mass.-based Alpha Industries Inc. Conexant’s stock fell about 66% on the day of the spinoff. The new company, Skyworks Solutions Inc., has a market value of about $700 million at recent check.
Other big losers on the Billion Dollar index included Costa Mesa-based Emulex Corp., which lost $980 million or 35% of its market value and Costa Mesa-based ICN Pharmaceu-ticals Corp., down $596 million or 23%. ICN spun off its Ribapharm unit, which debuted on the Billion Dollar index with a market value of $1.4 billion, but has since fallen to $885 million.
Bright spots on the list include Irvine-based Westcorp, moving into the club with a 42% gain in market value to $1.3 billion. Another big gainer was Irvine-based homebuilder Standard Pacific Corp., which added $312 million for a 38% gain.
But both of those companies since have seen their shares turn sharply downward this month, perhaps on fears that the hot housing market has overheated.
Nineteen of 20 stocks that make up the OC Tech index had a decline in the quarter. Fourteen companies lost more than 25% of their market value, while seven of those had a drop of more than 50%. The biggest loser in the tech index was DDi Corp., which lost 90% of its value.
The Business Journal indexes, compiled by Roth Capital Partners LLC in Newport Beach, are more volatile than the national averages thanks to their high share of technology and small companies. Most of the gainers on the indexes were finance and mortgage companies, subprime lenders, title insurers or homebuilders. Directly or indirectly, their businesses were linked to real estate.
Orange-based title insurer American National Financial Inc., a member of the OC 50 index, saw its market value soar 85% in the quarter. Similarly, Irvine-based New Century Financial Inc., a subprime mortgage lender, was the second biggest mover in the index with a 58% gain, though its lost ground this month.
For the past year or so, title insurers and mortgage lenders have benefited tremendously because of refinancing and sale of new and existing homes.
