Top O.C. Public Companies a Diverse Mix
Public companies in Orange County posted $49.4 billion in sales last year, almost half of it concentrated in the performance of a handful of technology and medical enterprises.
But while fewer than 10% of the county’s public companies are billion-dollar businesses, a look at how well they reward their investors shows that there were a lot of winners in 1995.
And those winners come in all sizes and from all facets of industry and commerce. They include fresh entrepreneurial endeavors and old-line, ironclad industrials, and they range from the flashy to flashes-in-a-pan.
That kind of diversity is what Orange County business is all about.
The Times uses a two-year average return on equity, generally considered the best single measurement of performance, to rank the Orange County companies. By that measure, two-thirds of the publicly traded businesses, a total of 68, posted positive numbers.
As it should be, the list is dominated by computer and health industry businesses. They have come to define Orange County, indeed, all of California, to much of the world.
But L.L. Knickerbocker Co., a $13.5-million-a-year telemarketer of collectible knickknacks, is No. 3 on the list, thanks to a hefty 78.5% return on equity, which is profit as a proportion of shareholder investment.
Such diversity--the top 10 also includes an automobile financing company and a sunglasses maker--is what keeps the county’s economy healthy. “It is the safety net” that many regional economies lack, says Dennis Aigner, dean of the UCI Graduate School of Management.
The performance determined by the return on equity measuring stick isn’t always stellar though--a company recovering from financial disaster can post a far more impressive return on equity than a stable, consistently profitable business.
Thus, the top Orange County performer for 1995, Alliance Imaging Inc., is a medical equipment leasing company that just a few years ago was on the ropes. After a debt restructuring and a $19-million loss in 1994, the Orange-based provider of magnetic resonance imaging systems posted a $4.1-million profit for 1995 and saw its stock price rise almost 150%, largely on investor anticipation of future successes.
Alliance, however, doesn’t show up in the broader Times 100 statewide ranking of companies, which uses five separate financial measures and paints a broader picture than the return on equity snapshot used for the county listing.
The top Orange County business in the statewide rankings is Irvine computer disk drive maker Western Digital Corp., which placed 47th based on market capitalization, total sales, return on equity and the one-year increases in both sales and stock price. In contrast, Western Digital’s 30.6% return on equity won it sixth place on the Orange County list.
It is between medical company Alliance and computer parts maker Western Digital that the diversity and ingenuity that drives Orange County’s business community shows through.
* WFS Financial Inc., the No. 2 performer, is a relatively new spinoff from Irvine bank holding company Westcorp Inc. WFS was formed when federal regulators grew uncomfortable with the emphasis Westcorp subsidiary Western Federal Savings was placing on packaging and marketing automobile loans in the secondary investment market. So Westcorp took the automotive section out of the bank and went to Wall Street with it. Over the last two years, the company’s return on equity has averaged 135.2%. Profits rose 78% in 1995, to $33.4 million.
* L.L. Knickerbocker Co., a telemarketer of collectibles, placed third thanks largely to a hefty run-up in stock price fanned by the Rancho Santa Margarita company’s affiliation with celebrities Farrah Fawcett--a member of the board of directors--and Marie Osmond, who has licensed a line of collector dolls to Knickerbocker.
* In fourth place is sunglass maker Oakley Inc., which went public two years ago and has seen all of its numbers soar, in part because of the company’s obsession with maintaining a high-quality image. Oakley promotes celebrity spokesmen and has gone to court several times recently to block unauthorized dealers from selling its glasses--which start at about $50.
* Rockford Industries, in fifth place, moves back into the Orange County mainstream. The company finances the lease or purchase of medical equipment by physicians, dentists, optometrists, chiropractors and other primary health-care providers. Riding the health-care boom, Rockford has nearly tripled sales in three years. Its profits rose to $2.1 million last year from $400,000 in 1992, returning investors a two-year average of 33.7%.
The diversity among the top six companies in the county isn’t a fluke. Businesses such as frozen breads and prepared sandwiches maker Bridgford Foods Corp. and gas and oil additives company Wynn’s International Corp. pepper the list this year, as they have in the past.
Still, it is good news that high-technology firms such as TouchStone Software Corp. and health and medical companies such as drug distributor Bergen Brunswig Corp. dominate the list, economy watchers say.
“It shows that we are developing strong industry clusters in biomedical sciences and products and in electronics and software, and that’s important because it makes us a focus of attention in those areas,” said Aigner, of UCI’s management school. “In health care, especially, there are companies in Europe clamoring to come” set up shop in the new UCI Center for Health Sciences, a business development complex the university is starting, he said.
“But we need the diversity, because if we guess wrong about any of these industry concentrations and they don’t make it, then we have the resilience we need to survive because we aren’t overly specialized,” he said.
