O.C. Firms Keep Calm as Stocks Are Drubbed

By PATRICE APODACA

Oct. 28, 1997 12 AM PT

TIMES STAFF WRITER

Wall Street’s free fall on Monday sent the stocks of Orange County companies tumbling, but frustrated executives said they were trying to stay cool and take it all in stride.

“You become a victim of circumstance,” said Frank Yoshino, treasurer at MTI Technology Corp., an Anaheim maker of computer storage products.

MTI’s stock fell $3.13 a share to close at $12.63. The 19.8% decline was the steepest among all Orange County-based companies, despite a surge in quarterly profits.

“It’s nothing the company has done, it’s just the market,” Yoshino said.

On a day of bloodletting in stock markets throughout the world, Orange County’s stocks bled right along with them. The Bloomberg Orange County Index of local stocks lost 7.3% of its value on Monday, compared with the 7.2%, or 554.26-point, drop in the Dow Jones Industrial Average.

The market’s slide over the last several days has taken big slices out of the market value of many local companies. Among those hardest hit were technology firms and businesses with significant overseas operations. A rout in Asian stocks starting last Thursday triggered declines in share prices in Europe, Latin America and the United States.

Since last Wednesday’s stock market close, 46 county-based businesses have lost at least 10% of their market value. Seven dropped at least 20%.

Datum Inc., whose stock has been punished mercilessly lately, topped the list with a 37% decline in the last three days of trading. Despite Datum’s strong growth in sales and earnings, nervous investors have continued to react negatively to a delay in orders from a major customer as it switches to a new inventory system.

Its stock was pummeled again on Monday, falling $3.38 a share, or 17.3%, to $16.13, the second-largest percentage loss among local stocks.

“I won’t deny that the additional emotion was anger at the system,” said Datum chief executive Louis B. Horwitz.

“But you have to be a little philosophical,” he said. “Our task is to stay cool and remember that our job is to run the company.”

Many local companies that are perceived as being vulnerable to the turmoil in foreign markets saw their stocks take a beating.

QLogic Corp. in Costa Mesa does a large share of its business overseas. Investors sent its stock sliding $4.50 a share, or 11.9%, to $33.25.

The market correction “is sobering,” said Gary Liebl, an Orange County-based investor and chairman of QLogic. “As someone who’s pretty active in the market, I consider today the nightmare we all hope we don’t see.”

Until recently, QLogic, a supplier of semiconductor products, had seen its stock rise nearly $10 to more than $40 a share since it went public in August. Last week it reported that its fiscal second-quarter earnings more than doubled from a year earlier.

Liebl said that despite the market setback, the prospects both for QLogic and the economy remain strong.

The sell-off of QLogic stock “isn’t a reflection of the company, its fundamentals, its success momentum,” he said.

Investors like Liebl lost a significant portion of their net worth on Monday--at least on paper. Even so, he said, “I’m a long-term, end-game player. I think the U.S. stock market, notwithstanding today, is still the most attractive place to put money for the long term.”

Uri Levi, chief executive of Dense-Pac Microsystems in Garden Grove, said that investors might have mistakenly believed the company would be hurt by an economic collapse in Asian markets. On the contrary, he said, the maker of miniaturized memory modules sells almost all its products in the United States, mostly to the military.

“I am concerned about the market,” he said, but “I think we’re going to be OK.”

At Fluor Corp. in Irvine, company officials believe the turmoil is transitory. Fluor’s stock dropped $4.75 a share, or 9.5%, to $45.

Fluor has concentrated in the Asia-Pacific region on jobs involving exportable products, such as petroleum refineries, telecommunications and electronics equipment factories, and mines, said spokeswoman Lisa Boyette.

“Those kinds of markets are being affected much less than those involving government contracting, road building and power plant projects,” she said.

Karen Sohl, who heads investor relations at Procom Technology Inc., an Irvine maker of data storage devices, noted that the stocks of all its competitors also fell, in many cases by a much greater share than Procom’s 15.6% drop. It’s stock closed at $13.50 a share, down $2.50.

What’s more, Sohl said, all the selling in Procom’s stock was by retail investors, not by institutions such as pension funds, which tend to hold stocks for the long term.

Marvin Loeb, chief executive at Trimedyne, said a decline in stock value has little visible impact on company operations unless the company needs to sell more shares to raise money. The Irvine maker of lasers and other medical equipment saw its stock fall 38 cents a share to $2.13.

But, Loeb added, “it does depress employee morale because stock options are a big part of incentives these days.”

Although more than one-third of Trimedyne’s business is overseas, Loeb said he sees little lasting effect from the panic in foreign markets. “I tend to think the market was looking for a reason to decline,” he said.

The stock of ICN Pharmaceuticals, the big Costa Mesa-based drug concern, was also hammered on Monday. It plunged $8.13 a share, or 15.7%, to $43.56.

“Everybody in health care--in Orange County and everywhere else--got killed,” said Bob Back, an ICN analyst at Chicago-based BackFocus Chartered.

Staff at Javelin Systems Inc., a Tustin maker of touch-screen computers for the food service and retail industries, took calls from worried investors throughout the day. The company’s stock price dropped $1.63 a share, or 15.3%, closing at $9.

“The general question everyone is asking is, ‘When are you going to put out some news?”’ a company spokeswoman said. “They want to hear any news that might bolster the stock price. Thank goodness we’re reporting our first-quarter results tomorrow.”

Indeed, companies with strong earnings could be among the first to rebound, said Dan Lavin, a technology analyst with the research firm Dataquest.

“Technology stocks have been so hot for so long, conventional wisdom says there would be a drop,” Lavin said. “The stocks I’d be worried about are the high-flying businesses with no earnings, or these sexy technology stocks that were priced way too high in the first place.”

Times staff writers P.J. Huffstutter, Barbara Marsh and John O’Dell contributed to this report.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Local Losers:

Orange County’s 10 stocks with the highest percent drop Monday:

*--*

% Drop Dollar decline 1. MTI Technology 19.8% $3.13 2. Datum Inc. 17.3% $3.38 3. Motorvac Technology 17.1% $0.44 4. ICN Pharmaceuticals 15.7% $8.13 5. Procom Technology Inc. 15.6% $2.50 6. Javelin Systems 15.3% $1.63 7. Trimedyne Inc. 15.0% $0.38 8. Simulation Sciences 14.4% $3.13 9. Dense-Pac Micro 14.3% $0.56 9. Cortex Pharmaceuticals 14.3% $0.44

*--*

* Does not include stocks that trade under $2 per share.

Source: Bloomberg News

Researched by JANICE L. JONES / Los Angeles Times

How Orange County Stocks Fared

The Bloomberg Orange County Index, a weighted index designed to measure performance of major Orange County stocks, fell 13.35 points Monday from last week’s close. Hourly closing index levels, Eastern Standard Time:

Friday’s close: 182.99

Open: 179.83

10:30: 179.33

11:30: 176.48

12:30: 175.85

1:30: 173.32

2:30: 171.93

3:30: 169.54

4:30: 169.64

Monday’s close: 169.64

****

Caught in the Downdraft