The two biggest sales of locally based public companies in Orange County’s history brought an equally historic reduction to the rest of the field.
The 100 entries that make up this year’s list of the largest public companies had a combined market capitalization of $98 billion as of March 31, down 53% from a year earlier.
The decline tracks primarily to the departure of Allergan Inc. and Broadcom Corp., which combined to account for nearly $110 billion in market cap. Allergan sold for about $72.5 billion last year, while Broadcom fetched $37 billion in a sale that closed in February.
The buyers of Allergan and Broadcom have retained those respective names and significant operations in Orange County (see related story on Gavin Herbert, founder of Allergan, page 1). But Allergan is now officially headquartered in Dublin, Ireland, and Broadcom is run from San Jose.
The departure of the two companies—which jockeyed for the top spot for some time before Allergan took a big lead in the years leading up to its sale—wasn’t the only thing cutting into the market cap of this year’s list.
The recent choppiness in the market took a toll. Nearly half—49—of the companies on this year’s list posted declines in market capitalization compared with a year earlier. Thirty-four local companies saw increases, and 17 of the smaller companies grew large enough to debut.
The market hit a couple of the larger companies here particularly hard.
It also erased a few billion dollars in market cap in the last year.
• No. 2 HCP Inc., a healthcare real estate investment trust based in Irvine, saw $4.7 billion disappear from its market cap, a 24% dip that gave it a value of $15.2 billion.
Investors most likely were shaken by the U.S. Department of Justice’s civil investigation of the REIT’s largest tenant, Toledo, Ohio-based nursing home company HCR Manor Care Inc.
HCP reported a 12% increase in revenue year-over-year to $2.5 billion, but it swung to a $559 million loss. It posted a profit of $922 million the previous year. HCP increased its local headcount 14% to 124 and employs a total of 187, up 9%.
• Irvine-based storage products maker Western Digital Corp. took the No. 3 spot, despite a $10 billion trim in market cap—a plummet of 48% to a market value of $11 billion.
The company is working through its $17 billion acquisition of SanDisk Corp., a computer memory maker in Milpitas. The deal caused China-based Unisplendour Corp. Ltd. to withdraw a $3.8 billion investment in Western Digital after the acquisition attracted the attention of the U.S. Treasury Department and the Committee on Foreign Investment in the United States.
• One company rose on the local landscape as a result of its own strong performance, the sales of Allergan and Broadcom, and the hard knocks sustained by WD and HCP. Irvine-based heart valve maker Edwards Lifesciences rose from the No. 5 spot last year to the top of this year’s list, with a market cap of almost $19 billion. The company’s shares rose about 24% in the past year, and its market cap accounts for almost a fifth of the value of the entire list.
Edwards reported $2.5 billion in revenue last year, up 7% year-over-year. Its net income was $495 million, down 39%. It employs 3,448 in Orange County, an increase of 2.5 % year-over-year.
• A few companies added more than a $1 billion to their respective market caps. Irvine-based technology distributor Ingram Micro Inc. ranked No. 4 with a 34% increase in its market cap to $5.3 billion.
Much of the increase is due to Chinese investor Tianjin Tianhai Investment Co. Ltd. acquiring the company for $6 billion.
Ingram is expected to hold on to its Irvine headquarters but will become a part of the Hainan-based Fortune Global 500 company.
Ingram reported revenues of $43 billion and profits of $215 million for full-year 2015. Those numbers are a 7.5% revenue drop year-over-year and a 19% fall in profits. The company employs 839 locally, down 4%, and about 29,600 worldwide, a 10% increase.
• Aliso Viejo-based chipmaker Microsemi Corp. added about $1 billion to its market cap, about a 28% increase to $4.3 billion to rank No. 5. Company revenue was up 7% year-over-year to $1.3 billion, with a 114% increase in profits to $88.6 million.
The company increased local headcount to 276, up 19%, and employs about 4,800 total, about 43% more than the previous year.
• Irvine-based CalAtlantic Group Inc., the result of the $3.4 billion merger between homebuilders Ryland Group Inc. in Westlake Village and Irvine-based Standard Pacific, had a 65% increase in market cap to $4 billion. Company revenue increased 123% to $5.4 billion last year with a 1% year-over-year fall in profits to $214 million.
CalAtlantic rose five spots to No. 7 and added to local headcount by 4% to 228 and more than doubled its total employees to 2,842, up 125%.
A handful of companies had triple- or quadruple-digit growth in their market caps over the past year. Irvine-based bank First Foundation went from No. 52 to No. 37 when its market cap increased 131% to $359 million. Cloud Security Corp., an Internet security company in Newport Beach, debuted as No. 59 with a market cap of $71 million, a 4,800% increase. Irvine-based computer memory maker Netlist Inc. rose 28 spots to No. 61 with a 187% increase in market cap to $69 million.
Other Measures
The annual list also provides useful business information, such as revenue, net income and number of local employees, which don’t affect the rankings.
The companies on this year’s list reported about $98 billion in revenue, a 2.4% increase compared to their own combined total a year earlier.
Net income for the overall list was $3.2 billion, a 33% drop year-over-year.
This year’s companies combined to employ a little more than 25,000 in OC, about a 4% increase from last year. Their companywide total increased nearly 2% year-over-year to about 283,000.
You can already expect more change on next year’s list, which looks likely to drop at least four of this year’s entries:
• Irvine-based laser and optics maker Newport Corp., No. 21, has been acquired by Massachusetts-based MKS Instruments Inc. in an all-cash $980 million deal.
• Multi-Fineline Electronix Inc., an Irvine-based printed circuit board maker, was sold for $610 million to China-based sheet metal supplier Suzhou Dongshan Precision Manufacturing Co. The deal is expected to close in the third quarter. M-Flex is No. 29.
• No. 93, Pacific Sunwear of California Inc., a clothing retailer in Anaheim, filed for bankruptcy April 7.
• No. 98, Adaptive Medias Inc. may move its headquarters out of Orange County to Culver City.
