Orange County’s “billion-dollar club”—17 local public companies that had market values of $1 billion or more before the recent turbulence on Wall Street—are now worth about $12 billion less than they were last month.
Three of them were knocked out of the billion-dollar club as the Business Journal went to press last Friday and the stock markets continued its roller-coaster ride.
All 17 combined to take the $12-billion haircut, an 11% decline in their combined market value.
Two local leaders by market value—drug maker Allergan Inc. and chipmaker Broadcom Corp., both in Irvine—each saw their worth decline by about $2 billion based on the market’s wild swings over the last two weeks.
Another company posting a 10-digit market cap loss was Irvine-based disk drive maker Western Digital Corp.
The companies that dropped from the billion-dollar club list in recent weeks were Aliso Viejo-based hotel owner Sunstone Hotel Investors Inc. (see related story, right), Santa Ana-based data and analytics company CoreLogic Inc., and Santa Ana-based printed circuit board maker TTM Technologies Inc.
Difficulties extended to the mid-tier of public companies here.
Three locally based nursing home companies saw their shares take a pounding from factors that went beyond the turmoil on Wall Street. All three of them—Irvine-based Sun Healthcare Group Inc., Foothill Ranch-based Skilled Healthcare Group Inc. and Ensign Group Inc. of Mission Viejo—tumbled on news that the federal government would trim Medicare reimbursements by roughly 11%.
The move hit the nursing home companies hard because they count on Medicare for significant portions of their revenue. The Medicare cuts also hit healthcare real estate investor Sabra Health Care REIT Inc. in Irvine, which spun off from Sun last year. Sabra was formed out of Sun’s real estate portfolio. It counts Sun as its primary tenant.
The four combined companies shed more than 30% of their market value in recent weeks, and now count a total market value of $1.1 billion.
Companies that reported less-than-stellar earnings for the second quarter also got hit extra hard.
CoreLogic lost more than $800 million of its market value since lowering its 2011 outlook in recent weeks.
The stock is down nearly 40%, and just fell short of the local billion-dollar club last week.
TTM’s net income swung to a loss in the recently ended quarter compared to a year ago. That combined with the market swings to push the stock down as much as 30%.
Santa Ana-based solid state storage drive maker STEC Inc.’s market value was on the verge of joining the billion-dollar club last month. Its market value was down to about $500 million last week.
The freefall came amid the general sell-off on Wall Street, aggravated by lowered projections for its third-quarter guidance, a handful of analyst downgrades, and word that the Securities and Exchange Commission is considering a civil injunction as part of an investigation into allegations of making false and misleading statements regarding a secondary offering in 2009.
Irvine-based Ista Pharmaceuticals Inc. has shed about a third of its market value since the end of July, when the company reported that its experimental dry-eye drug didn’t meet the main goal of a late-stage clinical trial.
The drug maker’s stock fell more than 40% in the last month to a market value of about $183 million at a recent check.
What’s ahead?
Tough to say based on the past two weeks, with the federal government’s budget wrangling and concerns about government finances in several European countries.
And the market does go up and down—Allergan and Broadcom each saw a single-day gain of $1 billion in their values as the Business Journal went to press (see Market Watch).
