The Times 100 : The Best Performing Companies in California : THE BOTTOM LINE : Oil, Utility and Bank Firms Lead Profit List : Atlantic Richfield regained the No. 1 spot as Chevron sank. Financial services firms had some of the biggest absolute losses.
In 1987, Atlantic Richfield Co. briefly landed the lead spot on The Times’ top 25 in absolute profits list on a technicality. Its reign at the top, however, was short-lived, as Chevron restated its 1987 earnings after the list was published and retained the lead in 1988.
But Los Angeles-based Arco was back on top in 1989, several places ahead of its much larger rival in the oil and gas business because special charges cut Chevron’s 1989 earnings by almost 90%. Arco topped a diverse field, with representation from California’s big utilities, banks, technology and medical companies--as well as the oil and gas industry.
On the other end of the spectrum, financial services firms were disproportionately represented among companies with the distinction of having the worst bottom lines in absolute dollar losses last year. The decline in the junk bond market and other troubles in the thrift industry were major reasons for the pattern.
Despite the huge profits reaped by the 25 firms with the biggest earnings in absolute dollars, only Syntex, a Palo Alto pharmaceuticals company, also appeared among the 25 companies with the best profit margins in 1989. It ranked ninth in profit from continuing operations as a percent of sales.
Syntex, which was among Forbes magazine’s most profitable companies of the 1980s, has seen its earnings grow as sales of Naprosyn, an anti-inflammation prescription drug, has gained wide acceptance for treating arthritis, said Viren Mehta, at New York-based Mehta & Isaly research firm. Its fourth-quarter profit declined because of competition in the United States from other anti-inflammation drugs, Syntex said.
But Syntex has had notable success in the past year in moving new drugs closer to market. It introduced, or won regulatory approval to market, four drugs, including an injectable non-narcotic pain reliever for the post-surgery market and a new drug, Synarel, for treating endometriosis, a painful disorder of the female reproductive system.
Topping the list of the 25 best profit margins was United Television Inc., a newcomer to the category. The company, which operates television stations, is majority owned by Chris-Craft Industries. It was followed by Magma Power, also making its debut on the list. The San Diego utility has thrived in developing geothermal energy for the generation of electricity. It holds a half-interest in four geothermal power plants in Imperial County.
Companies that maintained stellar profit margins from 1988 to 1989 included Franklin Resources and the computer software firms Adobe Systems, which makes desktop publishing software, and Autodesk Inc.
San Francisco-based Chevron’s slide on the absolute profit list--from No. 1 in 1988 to No. 18 last year--reflects $1.207 billion in special charges, including a $445-million writedown on an offshore oil field near Santa Barbara and a $325-million charge for future environmental cleanups at some of its refining and chemical plants in the United States.
Unocal, No. 20 in absolute profit in 1987 but absent because of writedowns in 1988, reentered the rankings at No. 13. A fourth oil company, Occidental Petroleum, remained at No. 17.
Many oil companies, including Arco, were helped in 1989 by rising crude oil prices, said M. Craig Schwerdt, an analyst with Seidler Amdec Securities in Los Angeles.
Among other industries, utilities and the state’s big banks were amply represented at the top of the absolute profits list. San Francisco-based Pacific Telesis Group moved up to the No. 2 spot from third place in 1988. The holding company for Pacific Bell Telephone Co. has benefited from diversification, a change in state rules removing the cap on its profits and a robust California economy. The regulatory change encouraged the company to aggressively cut costs, thereby improving its bottom line.
Pacific Gas & Electric, after a one-year absence from the top 25, returned in 1989 to grab the No. 3 ranking. The San Francisco-based utility reported depressed earnings in 1988 because of writeoffs from the settlement of the Diablo Canyon nuclear power plant rate case.
Debuting this year on the top absolute profits list were: MCA Inc., the giant entertainment concern; Litton Industries; National Medical Enterprises, and Golden West Financial.
Once-troubled BankAmerica continued its impressive comeback that began in 1988. The San Francisco bank holding company ranked No. 6 in 1989, moving up three places.
Although most of the state’s big banks kept to a steady, profitable course in 1990, some of their cousins in the financial services industry wandered into the disaster zone and got clobbered by a deteriorating junk bond market and bad loans stemming from such factors as weak real estate markets in some parts of the country.
Topping the list of the 25 with the biggest losses were insurer First Executive Corp. and thrift Columbia Savings & Loan--both junk bond casualties.
ABSOLUTE PROFITS
Companies ranked by profits from continuing operations.
‘89 income Rank Company ($ millions) 1 Atlantic Richfield 1,953 2 Pacific Telesis Group 1,242 3 Pacific Gas & Electric** 901 4 Hewlett-Packard* 829 5 SCEcorp 823 6 BankAmerica** 820 7 Security Pacific 741 8 Rockwell International* 735 9 Walt Disney* 703 10 Wells Fargo 601 11 Apple Computer* 454 12 Intel 391 13 Unocal 358 14 Transamerica 332 15 Syntex* 303 16 Times Mirror 298 17 Occidental Petroleum 256 18 Chevron** 251 19 MCA 245 20 Natl. Medical Enterprises* 213 21 Pacific Enterprises 211 22 H.F. Ahmanson 194 23 San Diego Gas & Electric 187 24 Litton Industries* 178 25 Golden West Financial 158
* See exceptions, page 46.
** See company notes, page 45.
IN THE RED
Companies ranked by loss from continuing operations.
‘89 loss Rank Company ($ millions) 1 First Executive (831) 2 Columbia Savings & Loan (591) 3 Great American Bank (263) 4 National Semiconductor* (202) 5 Imperial Corp.* (164) 6 First Interstate Bancorp** (152) 7 Daisy Systems* ** (140) 8 Beverly Enterprises (104) 9 ICN Pharmaceuticals* (87) 10 Northrop (81) 11 MGM/UA Communic.* (75) 12 Coast Savings Financial (74) 13 Financial Corp.-S.Barb (64) 14 Pathe Communic (61) 15 Farwest Financial (53) 16 Micropolis (50) 17 Guy F. Atkinson (45) 18 MAI Basic Four (40) 19 Landmark Land (35) 20 Central Bank (30) 21 National Education (29) 22 Ashton-Tate** (29) 23 Siliconix (26) 24 Vons (25) 25 LSI Logic (25)
* See exceptions, page 46.
** See company notes, page 45.
PROFIT MARGINS
Companies ranked by profits from continuing operations as a percent of sales.
% ’89 Rank Company Return 1 United Television** 58.6 2 Magma Power 39.3 3 Franklin Resources* 31.0 4 Adobe Systems* 27.8 5 Autodesk* 26.0 6 Diagnostic Products 25.2 7 Alza 22.9 8 Community Psychiatric* 22.5 9 Syntex* 22.5 10 Novellus Systems 22.1 11 Vitalink Communications 22.0 12 Intl. Lease Finance* 20.2 13 Cadence Design Systems 19.4 14 WD-40* 18.8 15 Altera 18.3 16 Wesco Financial 18.3 17 Cirrus Logic 17.9 18 Carolco Pictures 17.6 19 Adac Laboratories* 17.4 20 Telecredit* 17.4 21 Dionex* 17.0 22 Acuson 16.7 23 Software Publishing* 16.5 24 National Health Laboratories 16.1 25 Digital Microwave* 15.5
* See exceptions, page 46.
** See company notes, page 45.
