At least it’s a great time to date some options.
Investors have pummeled Orange County technology stocks in the past couple of months. The companies have been hammered by the general market downturn and their own issues, including stock option grant inquiries and less-than-rosy sales outlooks.
Nine local technology stocks have posted declines of more than 10%, with one losing 50% of its value in recent weeks.
OC technology stocks are down about 15% during the past two months, according to Newport Beach-based Roth Capital Partners LLC’s OC Tech index for the Business Journal, which appears on page 15. Roth’s broader index, the OC 50, is down about 8% in the period.
The local sell-off comes as the Nasdaq index lost about 9% in the same period. The overall market hasn’t been as bad, with the S & P; 500 index off about 5%.
OC tech stocks were some of the highfliers on Wall Street just a few months ago.
After a huge run-up early this year, Irvine-based chipmaker Broadcom Corp. alone has lost about 30% of its market value,some $8 billion,in the past few months.
Broadcom, with a market value of about $17 billion at recent check, is the county’s most valuable company.
Newport Beach-based chipmaker Conexant Systems Inc. has watched its stock drop by more than 30%, losing more than $300 million in market value in the past few months.
Conexant shares had rebounded under Chief Executive Dwight Decker, who returned more than a year ago as leader after a big acquisition proved problematic.
The biggest decliner by percentage: flexible circuit board maker Multi-Fineline Electronix Inc. in Anaheim.
Shares of Multi-Fineline are down more than 50% in the past few months. The company, known as M-Flex, has lost about $700 million in market value.
M-Flex’s boards go into Motorola Inc.’s slim mobile phones. About 80% of its sales come from Motorola, which makes some analysts nervous.
The company also has been criticized for a pending $500 acquisition of Singapore’s MFS Technology Ltd.
Both M-Flex and MFS are part of Singapore’s WBL Corp. On top of that, M-Flex reported lower-than-expected sales and profits in the quarter ended March 31.
Chipmakers, software developers and computer companies all have fared poorly during the past few months. One brighter spot: networking gear manufacturers.
Investors generally have grown nervous about prospects for stocks with fresh signs of rising inflation and a general slowing in the economy. Valuations soared during the tech rebound of the past few years.
“People are really starting to look at risk premiums,” said Stephen Nielander, a director with Deutsche Bank Private Wealth Management in Costa Mesa.
Many technology companies still have solid sales and profit prospects, Nielander said.
That hasn’t helped many of them as of late.
The Philadelphia Semi-conductor Index was off nearly 15% in the past few months. Local chipmakers have fallen further.
A big factor for the drop at Broadcom: The company’s valuation had gotten ahead of its earnings outlook.
In late April, Broadcom’s shares were battered after the company’s earnings report.
The sales and earnings results weren’t out of line with Wall Street expectations. But several analysts said growth forecasts for the next few quarters weren’t as blockbuster as its shares warranted.
“We caution that research and development costs are also rising and that the law of large numbers on sales and higher share count (post split) will make it increasingly difficult to deliver big upside to consensus,” said UBS AG analyst Alex Gauna, in an April research note.
Broadcom also was one of the earlier companies to get caught up in the controversy over stock option grants.
The issue gained attention in mid-May, just as the overall stock market began to sputter on inflation fears.
Broadcom started a voluntary review of option grants in May.
A smaller chipmaker, Irvine-based Microsemi Corp., has watched its stock price slide about 20%, putting its market value at around $1.5 billion.
The chipmaker, which targets the defense and TV industry, among others, is one of the few technology stocks that hasn’t been hit by bad news. Microsemi even earned an upgrade from A.G. Edwards & Sons in mid-May.
The issues with Irvine-based computer maker Gateway Inc. are clearer.
Gateway is without a permanent chief executive. It continues to see heavy selling by its founder, Ted Waitt.
The company’s stock has lost nearly 30% of its value during the past couple of months, hitting record lows along the way.
One of the top U.S. computer sellers, Gateway has seen lackluster sales from its business and direct units, even as retail sales surge.
Former chief executive Wayne Inouye left earlier this year after the company reported weak earnings results. Gateway’s market value of less than $600 million is about half what it was at the start of the year.
Another computer-related stock, Western Digital Corp., was holding up well until early last week. That’s when the disk drive maker warned it saw some unexpected softness in the market.
Shares of Western Digital took a 7% hit in one day and are off more than 10% during the past two months.
Local software makers have done as badly,and worse in some cases,than the iShares Goldman Sachs Software Index, which is down about 20% during the past two months.
Aliso Viejo-based Quest Software Inc. has been among the harder hit tech OC stocks with losses of more than 20% since early May.
Quest has caught unwanted attention for its stock option grants, just as Broadcom has. The company makes software for monitoring large business applications, including databases.
In the past couple of months, Quest has lost about $350 million in market value, has received inquires from regulators and is the subject of shareholder lawsuits over the options issue.
Irvine-based Epicor Software Corp., a business software maker, has performed even worse than Quest. Epicor is down more than 20% in the past couple of months,minus downgrades or other negative news.
Costa Mesa-based FileNet Corp., which makes software that helps companies organize data, is down, though not as much. The company has seen it stock slip less than 10% in the past couple of months.
OC’s networking gear companies have fared better than others.
Costa Mesa-based Emulex Corp., which makes host bus adapters for storage area networks, has lost just 7% in the past couple of months. It’s seen some positive comments from a couple of analysts, including an upgrade from RBC Capital Markets Corp.
Meanwhile, Aliso Viejo-based QLogic Corp., which competes with Emulex on host bust adapters, has lost about 10% in the past couple of months. It saw a downgrade from RBC Capital Markets.
