Higher Area Stocks May Signal Rosier Local Economy : Markets: The index of shares in 105 local companies climbs 11.5% in the first quarter, surpassing an 8.4% rise in the Dow Jones average.
Several major stock indexes climbed to record highs in the first quarter, as Wall Street came to believe that the soaring U.S. economy would indeed make a “soft landing.” But local stocks did even better, perhaps signaling that the long-grounded local economy is just taking off.
The composite index of 105 stocks in the San Fernando, Santa Clarita and Conejo valleys and Ventura County climbed 11.5% in the first quarter that ended March 31, according to Media General Financial Services, a Richmond, Va., firm that compiles the list for The Times.
Leading the way were local electronics and computer firms, including Datametrics Corp., formerly an entrenched defense contractor that has begun to find commercial markets for its high-tech computer printers.
Meanwhile, the Dow Jones industrial average of 30 blue chip stocks gained 8.4% in the first quarter, while the Standard & Poor’s 500 Index, comprised of many of the nation’s largest companies, rose 9%. The Nasdaq composite index, a broad measure of small-company stocks, climbed 8.7%.
The dramatic upswing in the local index represented a sharp turnaround from last year, when lingering economic woes and the Northridge earthquake caused the Valley index to plunge 5%. But in the latest quarter, 66 of the 105 local stocks gained in price, while 35 declined and four remained the same.
The top performer was Semtech Corp., a Newbury Park-based company that makes regulators and switches for computers and other electronic devices. Semtech’s stock more than quadrupled during the first quarter from $2.63 to $11.50 per share.
Semtech had reported sharp earnings increases in the fourth quarter and year that ended Dec. 31, because of increased orders from personal computer manufacturers and telecommunications customers. The company posted a $569,000 profit in the fourth quarter, compared to $70,000 in the same quarter a year earlier.
Astro Sciences Corp., a Chatsworth-based maker of computer networking products, was the second best performing local stock in the quarter. Astro’s stock price shot up to $5.69 per share at the end of the first quarter, more than double the $2.75 per share price at the end of last year.
The company had reported a loss of $968,242 through the six months ended last Sept. 30, but then posted a profit of $27,076 in the December quarter, after the company had lowered prices and increased marketing efforts.
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One of the most successful stocks of the first quarter was that of Datametrics Corp. For three decades the company had subsisted on defense contracts, making $60,000 printers that churn out battle maps, while carried on tanks or ships. About 90% of the company’s revenue in 1993 came from business with the military.
But faced with a shrinking defense budget, the company turned to commercial markets, making $30,000 high-speed color printers. Datametrics recently reported that it had signed a multiyear distribution deal with A B Dick Co., an Illinois-based company that supplies equipment to the graphic arts industry. With plans to sell its commercial printers worldwide, Datametrics’ stock jumped 60% from $5 to $8 per share during the first quarter.
There were, however, losers in this rosy market. THQ Inc., a Calabasas-based maker and distributor of video games, watched its stock plunge 67% to $3.06 per share, down from $9.38 at year-end.
THQ posted a $9.72-million loss in the fourth quarter, and sales slid to $4.34 million, down from $13.3 million in the same quarter a year earlier. The company incurred $4.8 million in manufacturing and marketing costs to launch a new video game modem in the fourth quarter and abandoned several products in development at a cost of $3.75 million.
Brian J. Farrell, recently named chief executive at THQ, said the company has already cut staffing and rolled back executive salaries to reduce costs. The company has also imposed strict inventory controls to prevent the buildup that prompted THQ to slash prices last year. “We believe that we have taken appropriate measures to stabilize operations,” Farrell said.
CSL Lighting Manufacturing Inc., a Valencia-based company that makes lighting fixtures, was the second biggest loser of the quarter, as its stock price fell 47% from $2.25 to $1.19.
Another troubled stock was that of Micropolis Corp., a Chatsworth-based maker of computer disk drives. The company’s stock tumbled 45% to $4.88 at the end of the first quarter, down from $8.94 at year-end, as investors backed away from Micropolis after the company reported that it expected to post a first-quarter loss of $30 million or more.
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Micropolis said sales had fallen sharply due to reduced orders for disk drives, as well as production problems that led to a halt in the assembly of one drive product for most of the quarter. Production of that drive was not expected to resume for several weeks.
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10 Biggest Regional Stock Winners for 1st Quarter
Closing Percent price on change in Stock 3/31/95 1st quarter Line of business Semtech Cp $11.50 +337 Electronics Astro Sciences $5.69 +107 Computer products Datametrics Cp $8.00 +60 Computers printers Int Remote Imaging $7.88 +50 Testing Eltron Internat $28.00 +42 Electronics Pay Fone Sys $5.88 +38 Payroll TransWorld Bcp $11.25 +36 Banking Countrywide Credit $17.38 +35 Mortgage banking Premiere Radio $9.75 +35 Radio Foothill Grp $19.88 +33 Financial
Note: Excludes stocks whose Dec. 30, 1994, price was below $2.00 a share
Source: Media General Financial Services Inc., Richmond, Va.
10 Biggest Regional Stock Losers for 1st Quarter
Closing Percent price on change in Stock 3/31/95 1st quarter Line of business THQ Inc $3.06 -67 Video games CSL Lighting Mfg $1.19 -47 Lighting Micropolis Cp $4.88 -45 Disk drives Janex Internat $2.50 -43 Toys OroAmerica Inc $5.00 -38 Jewelry Cherokee Inc $2.63 -34 Clothing Reddi Brake Sup $3.31 -34 Automotive National Tech Systems $1.88 -32 Testing Positive Resp TV $13.38 -27 TV commercials Variflex Inc $15.50 -26 Sporting goods
Note: Excludes stocks whose Dec. 30, 1994, price was below $2.00 a share
Source: Media General Financial Services Inc., Richmond, Va.
