THE TIMES 100: THE BEST COMPANIES IN CALIFORNIA : VIEW FROM THE STREET : CRASH COURSES : Most Big Stocks Held Steady After Wall Street’s Debacle; a Few Have Not Recovered

Like racehorses leaping a tall stone wall on a steeplechase course, most of California’s biggest stocks handily survived last October’s stock market crash. The few that took hard falls in October of 1987, however, generally haven’t recovered.

That pattern is apparent from a look at the market values of California’s 100 biggest stocks, which as a group recovered gamely after Oct. 19 and, overall, posted admirable gains between January, 1987, and April, 1988. The group ended that 15-month period with an increase of $22 billion, or 12%, in their market value.

Indeed, these stocks were still 1% ahead of their January, 1987, market value at the close of the market’s devastating slide of Black Monday.

Yet, while most stocks have recovered from last October’s pasting, many of those not supported by solid earnings--including many medium-sized and smaller firms--are still struggling.

“One of the big contrasts is between companies that are making money, and those (that) just expect to,” said Jim McCamant, editor of the Medical Stock Technology Stock Letter in Berkeley. “People aren’t willing to buy stock on hope any more; that’s what happens in a bear market.”

The market has been merciless toward many young high-tech and drug companies, such as Cetus, that have prospects but no profits. The stock of many financial service firms, shunned by many investors even before October, have become even less popular since the fall.

Last year, leading California companies joined the hundreds of concerns that bought their own stock after--as well as before--the market slide. Among the big California concerns that bought their own shares were Atlantic Richfield, National Semiconductor, Litton, MCA and Fluor.

The stock of leading high-tech firms and big exporters has been bid up almost as if the market slide never occurred. The high-tech firms on The Times list have expanded their collective market value by 50%, or $13 billion, during the past 15 months, aided by demand for a new generation of computer hardware and software and the fillip given to export sales by the lower dollar. They’re up 12% just since Oct. 19.

Hewlett-Packard, top ranked in market value with outstanding stock worth $16 billion, has added 49% to its market value since the beginning of 1987. Helped by increased export sales and the promise of a new computer line, the Palo Alto company’s market value has gained 30% since the October market crash.

Intel Corp., the resurgent computer chip maker, was still up 87% for the year on the day after the crash, as investors concentrated on the Intel microprocessors that will be built into personal computers, computer terminals and other products.

The high-tech group includes several of the year’s most dazzling success stories, such as Oracle Systems and Sun Microsystems. Oracle, a tiny Belmont, Calif., software concern, has increased its market worth 238%--to $930 million--since the beginning of 1987, while Sun, the workstation manufacturer, has increased its market worth 66%, to $1.2 billion.

Yet--unlike the days before the crash--investors are no longer indiscriminate buyers of high-tech issues. The market value of minicomputer maker Tandem Computers, which is struggling with earnings, has fallen 28% since October. And the market value of chip makers National Semiconductor and Advanced Micro Devices, which aren’t cashing in on the latest generation of chip technology, are off 23%, and 3%, respectively.

The market value of California’s oil companies has increased about 20% since the beginning of 1987, helped by expectations that oil prices have finally bottomed out, strong cash flow and whispers that there may be more takeovers in the oil patch.

The biggest gainer has been Atlantic Richfield, which virtually doubled its net income in 1987. Arco’s market value has risen 40% since January, 1987.

The market worth of Chevron, on the other hand, has remained flat, as the company has struggled to reinvigorate its marketing and refining operations.

As a group, California’s aerospace sector also lost market value for the year, largely because of the clouded earnings prospects of Northrop, now struggling with production problems, and Lockheed, which faces the end of its lucrative C-5B military transport plane contract and other worries.

“Aerospace has really lagged as a sector,” said Thomas F. Caraisco, director of research at the Henry F. Swift & Co. brokerage in San Francisco.

The combined market value of the five big aerospace companies value has declined about 5%, to $10.5 billion, since the beginning of 1987.

One of the clearest beneficiaries of the export surge has been Tiger International, owner of Flying Tiger Inc., the world’s largest scheduled air cargo line. Since January, 1987, as Asian demand for U.S. manufactured goods has filled the bellies of Flying Tiger planes, the Los Angeles company has added 42% to its market value. Tiger International’s market worth has increased 59%--or $172 million--just since October.

The Market Value 100 analysis shows that investors have shrugged off worries about the California drug and biotechnology firms that have earnings, such as Genentech, Syntex and Alza. These three have added 12% to their collective market value since the beginning of 1987, and 20% since the market crash.

Cetus is another story. Its stock has slumped from its 1986 high as heavy research and development expenses on cancer therapy drugs, AIDS tests and other products have turned its profits to losses. The biotech firm’s market value is off 31% since the beginning of 1987; it has given up 12% of its value since October alone.

Cetus nonetheless made The Times 100 list of Wall Street Favorites, based on its strong ratio of market value to sales.

The financial services firms were, not surprisingly, prominent among those that have lost market value during the past five quarters. Eleven of these 18 banks and savings and loans lost market value since January, 1987, and surrendered 4% of their market worth.

As a group, however, the financial services firms have bounced back since the crash, adding 12% to their market value since October.

Conspicuous among the comebacks is BankAmerica Corp., parent of Bank of America, which has added 31% to its market value since October, on investors’ expectations that it is in the midst of a turnaround. Another big market value gainer is Farmers Group, the Los Angeles insurance company that has been the target of a takeover attempt by Britain’s BAT Industries.

Farmers Group’s market value has increased 54% since the beginning of 1987 and 41% just since October.

Franklin Resources, the mutual fund manager that tops The Times 100 list for return on equity, has understandably been set back by the flattening of the market. Franklin has lost half its market value--$234 million--since the beginning of 1987 and has recovered only 3% since October.

THE MARKET VALUE 100 Ranks companies by stock price multiplied by shares outstanding.

4/4/88 market value Book value Market as Rank Company ($ millions) ($ millions) % of book 1 Hewlett-Packard 15,949.6 5,022.0 318 2 Chevron Corp. 15,523.2 15,780.0 98 3 Atlantic Richfield 14,814.7 5,878.0 252 4 Pacific Telesis Group 11,936.8 7,890.0 151 5 Walt Disney Co. 7,623.1 1,845.4 413 6 Southern Calif. Edison Co. 6,595.2 5,665.7 116 7 Pacific Gas & Electric 5,798.0 8,262.7 70 8 Occidental Petroleum 5,479.0 5,177.0 106 9 Intel 4,986.8 1,306.4 382 10 Apple Computer 4,825.2 836.5 577 11 Unocal 4,414.8 1,766.0 250 12 Times Mirror 4,306.4 1,454.2 296 13 Farmers Group 4,109.2 1,527.7 269 14 Syntex Corp. 4,024.5 604.4 666 15 Teledyne 3,745.4 1,976.0 190 16 Security Pacific 3,244.6 3,363.0 96 17 MCA Inc. 3,199.3 1,557.6 205 18 Genentech Inc. 2,949.2 355.4 830 19 Lockheed Corp. 2,861.5 2,087.0 137 20 Wells Fargo 2,723.6 2,247.6 121 21 Pacific Enterprises 2,705.0 1,721.7 157 22 Transamerica Corp. 2,468.3 2,624.6 94 23 Hilton Hotels 2,259.1 772.8 292 24 Litton Industries 2,101.5 1,053.8 199 25 First Interstate Bancorp 2,050.9 2,165.7 95 26 Henley Group 1,991.4 1,884.0 106 27 Lucky Stores 1,852.5 286.8 646 28 Raychem 1,781.1 570.9 312 29 Price Co. 1,777.0 379.3 468 30 San Diego Gas & Electric 1,760.0 1,399.6 126 31 Firemans Fund 1,733.5 1,511.2 115 32 BankAmerica Corp. 1,696.5 3,259.0 52 33 Great Western Financial 1,679.3 1,851.9 91 34 Amdahl Corp. 1,678.5 765.7 219 35 Clorox 1,633.4 616.4 265 36 National Medical Enterprises 1,601.7 942.3 170 37 Tandem Computers 1,554.1 720.9 216 38 H.F. Ahmanson & Co. 1,468.7 1,800.0 82 39 Fluor Corp. 1,458.0 531.7 274 40 Northrop 1,375.4 947.5 145 41 Homestake Mining 1,367.6 702.9 195 42 American Medical Intl. 1,321.0 959.4 138 43 Calmat Co. 1,309.4 437.6 299 44 McKesson 1,295.9 685.4 189 45 Sun Microsystems 1,247.3 240.7 518 46 National Semiconductor 1,195.9 1,040.0 115 47 Consolidated Freightways 1,098.7 687.9 160 48 Castle & Cooke 1,095.6 638.8 172 49 Community Psych. Cntrs. 986.1 325.1 303 50 Seagate Technology 981.3 354.0 277 51 Avery Intl. 977.5 465.9 210 52 Oracle Systems 930.2 97.0 959 53 First Executive Corp. 928.8 1,614.3 58 54 Advanced Micro Devices* 860.0 659.9 130 55 Golden West Financial 838.0 792.1 106 56 Potlatch 808.0 638.3 127 57 Alza** 790.5 139.0 569 58 Longs Drug Stores 753.7 296.5 254 59 The Gap 725.5 272.9 266 60 Computer Sciences 719.8 317.2 227 61 Fisher Scientific Group 699.7 294.7 237 62 Neutrogena 680.8 38.1 1,788 63 Ashton-Tate 670.3 158.1 424 64 Lorimar Telepictures 625.5 295.1 212 65 GlenFed 625.3 894.9 70 66 Amfac 620.3 411.6 151 67 CalFed 616.9 1,258.5 49 68 American President Cos. 614.8 704.9 87 69 Pic ‘N’ Save 613.5 192.0 320 70 MGM/UA Communications 601.4 267.0 225 71 Measurex 591.6 170.2 348 72 National Education 581.7 100.2 581 73 Varian Associates 578.8 438.1 132 74 Caesars World 570.5 417.4 137 75 KaiserTech Ltd. 555.0 866.0 64 76 Intl. Lease Finance Corp. 547.2 318.0 172 77 Autodesk 546.6 107.8 507 78 3COM Corp. 519.0 138.1 376 79 Argonaut Group 516.5 405.0 128 80 Home Federal S&L-SD; 513.9 846.0 61 81 City National Corp. 512.4 198.8 258 82 Acuson 491.0 70.6 695 83 Franklin Resources 467.3 104.6 447 84 Wickes Cos. 466.4 1,232.6 38 85 Tiger Intl. 465.3 20.9 2,230 86 Fleetwood Enterprises 458.0 332.2 138 87 Armor All Products 444.3 71.8 619 88 Telecredit 428.0 74.5 575 89 Kaufman & Broad 416.4 354.0 118 90 Western Digital 404.5 201.9 200 91 Atari 403.9 167.7 241 92 Applied Materials 398.4 153.6 259 93 Cypress Semiconductor 395.3 159.0 249 94 Rohr Industries 391.5 345.8 113 95 Zenith National Insurance 390.5 287.9 136 96 Beverly Enterprises 387.3 569.0 68 97 LSI Logic 374.3 308.2 121 98 Cetus 373.3 172.2 217 99 Tejon Ranch Co. 364.6 18.1 2,020 100 Bergen Brunswig 346.9 188.7 184

*Merged with Monolithic Memories in August, 1987

** Market value reflects sum of both of its two classes of common stock.