THE TIMES 100 : THE BEST PERFORMING COMPANIES IN CALIFORNIA : VIEW FROM THE STREET : For Investors, Banks Elbow Out Tech Firms : Hewlett-Packard, Genentech Among Those Losing Favor

As some of California’s computer stocks fell to earth last year, investors fell in love with the state’s bank stocks.

In 1987, the stocks of leading high-technology firms had been bid up almost as if the market crash in October of that year had never occurred. The high-technology firms on The Times’ Market Value 100 list--which measures how companies are valued in the stock market--had expanded their collective market value by 13% from January, 1987, to April, 1988, helped by the demand for a new generation of computer hardware and software.

The market value of computer firms on The Times’ list dropped 9.7% last year, however. And investors grew nervous about the industry’s short-term business prospects as both sales and earnings slowed in general amid a lack of breakthrough products.

In contrast, bank stocks were stellar performers as firms cut costs and became more efficient amid intense competitive battles within the financial services industry. Some of the state’s largest banks also moved aggressively to reduce their exposure to troubled Third World loans, removing perhaps the darkest cloud over the industry.

The changing fortunes are probably best illustrated by computer maker Hewlett-Packard Co. and Bank of America.

Despite projections that earnings at the Palo Alto-based computer maker would rise to $3.90 a share in fiscal 1989 from $3.36 last year, the computer company dropped from first place to No. 4 on the Market Value 100 list, while B of A soared 17 places on The Times list to No. 15. Overall, the six banks on the market value list completed a stunning turnaround, rising 45% in market value.

“Investors that look for value can always find stocks that are undervalued even in a bear market,” said Geraldine Weiss, editor and publisher of Investment Quality Trends, a La Jolla newsletter. “And many have found that value since the crash because the economy didn’t go into a recession as feared.”

Experts say market value data can be a good guide to a company’s current performance as well as its prospects. Still, investors need to watch for market distortions and changes in the economy as well as in specific industries.

For instance, earnings at two big semiconductor companies, Advanced Micro Devices Inc. and National Semiconductor Corp., have declined, and both companies’ orders have dropped. As a result, Advanced Micro fell to No. 68 from 54 on The Times’ list, while National Semiconductor dropped seven slots to No. 59.

Intel Corp., another computer chip maker, fell four places to No. 13 as the inventory for its powerful 80386 microprocessors ballooned after overly optimistic estimates of industry demand for the new product.

“There’s nothing going on right now in mainframe computers, personal computers and minicomputers in terms of new products,” said Michael Murphy, editor of the California Technology Stock Letter. “The individual investors have lost interest, and the institutional investors have gotten more short-term oriented.”

The most stunning drop on The Times’ list came outside the computer industry--with one biotechnology firm.

Genentech--whose $1.4 billion market value is still twice as large as its next biggest competitor, Amgen Inc.--tumbled to 40th place on The Times’ list from 18 last year largely because sales of its highly publicized blood clot-dissolving drug, tissue plasminogen activator or TPA, failed to meet expectations.

Despite Genentech’s troubles, another biotechnology firm, Alza Corp., advanced to 56th place on The Times’ list while Amgen Inc. made its first showing at 67th place. Overall, health-care services companies on The Times’ Market Value 100 boasted an impressive 26% increase in market value.

Likewise, LSI Logic Corp. bucked the computer industry doldrums by holding steady at No. 97 this year because of its niche in providing application-specific integrated circuits for manufacturers of electronic data processing, military and aerospace equipment.

Although the total market value of electronics companies on the Market Value 100 list remained unchanged from a year ago, the overall market value of aerospace firms increased 8.6%.

Another group that held its own was the entertainment industry.

Walt Disney Co. and MCA Inc. maintained their high rankings while MGM/UA Communications jumped a stunning 17 places--the biggest movement of any company ranked last year on the same list.

Analysts attributed the increase to expectations that the motion picture and television production company was seeking a buyer for all of the operations of UA, formerly United Artists. Those predictions came true April 17 when Australia-owned Qintex Entertainment announced that its board had unanimously approved the acquisition of UA for $1 billion.

THE MARKET VALUE 100

Companies ranked by market value as of April 3, 1989.

4/3/89 ’87 mkt. value Book value Rank Rank Company ($ millions) ($ millions) 1 2 Chevron Corp. 18,003.5 14,788.0 2 3 Atlantic Richfield Co. 15,412.5 6,247.0 3 4 Pacific Telesis Group 14,812.9 8,085.0 4 1 Hewlett-Packard Co. 11,974.4 4,533.0 5 5 Walt Disney Co. 10,752.8 2,359.3 6 7 Pacific Gas & Electric** 7,407.9 8,100.1 7 8 Occidental Petroleum 7,215.6 6,224.0 8 6 SCEcorp** 6,935.9 5,662.6 9 Rockwell International 5,744.2 3,693.0 10 11 Unocal Corp. 5,018.3 2,161.0 11 14 Syntex Corp. 4,723.9 753.5 12 12 Times Mirror Co. 4,709.9 1,686.9 13 9 Intel Corp. 4,671.5 2,080.1 14 16 Security Pacific Corp. 4,530.0 3,843.0 15 32 BankAmerica Corp. 4,522.5 4,149.0 16 10 Apple Computer Inc. 4,340.6 1,003.4 17 17 MCA Inc. 4,134.8 1,691.7 18 15 Teledyne Inc. 3,994.8 2,138.4 19 20 Wells Fargo & Co. 3,617.0 2,579.4 20 19 Lockheed Corp. 2,957.8 2,476.0 21 24 Hilton Hotels Corp. 2,726.2 814.1 22 22 Transamerica Corp. 2,585.5 2,829.4 23 21 Pacific Enterprises 2,521.0 1,924.0 24 26 First Interstate Banc. 2,185.3 2,239.9 25 30 San Diego Gas & Electric 2,117.1 1,379.9 26 36 Natl. Medical Enterp.* 2,066.8 1,038.3 27 33 Great Western Financial 1,915.2 1,983.2 28 25 Litton Industries Inc. 1,878.6 1,175.4 29 34 Amdahl Corp. 1,797.8 1,010.8 30 29 Price Co. 1,790.7 479.5 31 39 Fluor Corp. 1,778.7 601.7 32 35 Clorox Co. 1,757.0 712.9 33 38 H.F. Ahmanson & Co.** 1,675.4 1,886.2 34 37 Tandem Computers Inc. 1,651.6 856.9 35 48 Castle & Cooke Inc. 1,569.5 742.5 36 31 Firemans Fund Corp. 1,561.1 1,838.0 37 23 Henley Group Inc.** 1,509.0 1,589.0 38 52 Oracle Systems Corp.* 1,496.0 192.8 39 42 American Medical Intl. 1,461.5 888.7 40 18 Genentech Inc. 1,420.1 399.3 41 59 Gap Inc. 1,402.1 276.4 42 41 Homestake Mining 1,353.1 757.0 43 40 Northrop Corp. 1,297.9 1,003.6 44 44 McKesson Corp.* 1,267.0 700.4 45 53 First Executive Corp. 1,259.6 1,626.6 46 49 Community Psychiatric 1,219.8 382.3 47 45 Sun Microsystems Inc. 1,167.3 370.0 48 28 Raychem Corp. 1,154.0 722.2 49 47 Consld. Freightways 1,145.4 766.2 50 55 Golden West Financial 1,123.9 896.7 51 Newhall Land & Farm 1,063.0 160.1 52 51 Avery International 1,041.4 509.4 53 70 MGM/UA Commun. 912.5 220.7 54 43 Calmat Co. 852.6 481.6 55 56 Potlatch Corp. 850.5 722.0 56 57 Alza Corp. 835.6 159.8 57 83 Franklin Resources 816.2 150.5 58 74 Caesars World 796.7 172.3 59 46 Natl. Semiconductor* 775.5 814.3 60 Natl. Health Labs. 773.5 253.9 61 60 Computer Sciences* 761.2 383.3 62 Union Bank 760.9 819.8 63 Intl. Lease Finance 737.7 350.5 64 77 Autodesk Inc. 737.0 147.7 65 58 Longs Drug Stores Inc.* 726.7 298.2 66 78 3COM Corp.* 712.6 175.6 67 Amgen Inc.*** 709.7 168.7 68 54 Advanced Micro Devices 689.5 644.8 69 80 HomeFed Corp. 672.3 954.6 70 86 Fleetwood Enterprises* 669.9 386.7 71 82 Acuson Corp. 641.3 101.9 72 Beckman Instruments 641.3 232.1 73 Vons Cos.** 629.2 214.0 74 68 American President Cos. 622.3 616.7 75 61 Fisher Scientific Group 618.9 327.4 76 69 Pic ‘N Save Corp. 616.3 189.7 77 81 City National Corp. 606.7 235.6 78 Petrolane Partners** 590.3 344.4 79 72 National Education Corp. 589.5 184.9 80 94 Rohr Industries 588.2 374.7 81 65 Glenfed Inc. 579.4 1,127.6 82 Mattel Inc. 573.6 130.9 83 50 Seagate Technology 573.4 436.4 84 67 Calfed Inc. 558.3 1,383.1 85 73 Varian Associates Inc. 554.5 451.0 86 62 Neutrogena Corp. 551.1 58.9 87 79 Argonaut Group 550.2 444.8 88 96 Beverly Enterprises 521.9 545.5 89 99 Tejon Ranch Co. 516.8 28.9 90 71 Measurex Corp. 510.4 204.5 91 63 Ashton-Tate Co. 500.0 233.5 92 100 Bergen Brunswig Corp. 485.4 219.4 93 McClatchy Newspapers 483.8 259.8 94 20th Century Industries 474.9 240.0 95 Adobe Systems Inc. 457.3 44.3 96 Applied Biosystems Inc. 442.6 115.6 97 97 LSI Logic Corp. 414.6 331.6 98 87 Armor All Products* 402.7 87.3 99 Collins Foods Intl.* 402.4 223.4 100 93 Cypress Semiconductor 391.4 185.5

Market as Rank % of book 1 122 2 247 3 183 4 264 5 456 6 91 7 116 8 122 9 156 10 232 11 627 12 279 13 225 14 118 15 109 16 433 17 244 18 187 19 140 20 119 21 335 22 91 23 131 24 98 25 153 26 199 27 97 28 160 29 178 30 373 31 296 32 246 33 89 34 193 35 211 36 85 37 95 38 776 39 164 40 356 41 507 42 179 43 129 44 181 45 77 46 319 47 316 48 160 49 149 50 125 51 664 52 204 53 413 54 177 55 118 56 523 57 542 58 462 59 95 60 305 61 199 62 93 63 210 64 499 65 244 66 406 67 421 68 107 69 70 70 173 71 629 72 276 73 294 74 101 75 189 76 325 77 258 78 171 79 319 80 157 81 51 82 438 83 131 84 40 85 123 86 935 87 124 88 96 89 1,787 90 250 91 214 92 221 93 186 94 198 95 1,032 96 383 97 125 98 461 99 180 100 211

*See exceptions, page 38.

**See company notes, page 29.