Nasdaq, O.C. Stocks Dive, But Dow Rises
Orange County stocks suffered their worst one-day drop in years Monday, as Microsoft Corp.’s legal woes sent shudders through the technology sector.
The Orange County Bloomberg Index, which tracks 129 local companies, fell 34.04 points--nearly 9%--as several technology issues absorbed double-digit losses. The one-day slump was the largest in the index’s five-year history and mirrored a big drop in the technology-driven Nasdaq stock market.
In all, 78 Orange County stocks moved lower Monday, with such technology stalwarts as QLogic Corp. and Emulex Corp. absorbing the heaviest losses.
Analysts note that most of the stocks are still higher than they were at the start of the year, racking up big gains as investors poured money into so-called new-economy companies.
Indeed, while the Bloomberg index closed at 348.21 after Monday’s battering, it is still 13% above its level at the start of the year.
“You’re going to see swings both ways so dramatically because everyone wants in or out at the same time,” said Mark Stewart, chairman of Ocstox.com, a Web site that tracks local stocks.
“Everyone is looking at their portfolio today. It’s just panic, sheer panic. On some of the quality names, the people who were selling today, these will be the same people who will be rushing back in at higher prices two, three weeks from now.”
In Orange County, QLogic Corp. shares were hit the hardest, falling $32.44, or 23.9%, to $103.06 in Nasdaq trading. The Aliso Viejo company makes integrated circuits and adapter boards for computers.
Emulex Shares Fall 23%
Rival Emulex, which spun off QLogic in 1994, saw its shares fall 23.8%, or $25.94, to $83.19, the latest of several sell-offs that have driven the price down from $218.06 a week ago. Emulex’s stock plunged 26% last week after a Wall Street analyst downgraded his rating of the data-storage equipment maker.
Last year, Emulex and QLogic were among the stars of the surging technology segment in Orange County. Emulex shares soared 860%, while QLogic shares moved up 386%.
Another market star, Irvine chip developer Broadcom Corp., also saw its stock fall Monday, closing at $219.06 a share, down about 10%, or $23.81, in Nasdaq trading.
Nevertheless, Stewart said he sees bright futures for the three companies.
“Broadcom, Emulex and QLogic will return,” he said. “They are companies that have solid business plans and I think will come back and make new highs. Those are solid companies and these are momentum cycles. Instead of going down 25 points a day, they’ll start moving up 25 points a day.”
But Stewart said isn’t so optimistic about several other companies.
“Some of the others doing $3- to $5 million a quarter in revenue probably won’t be back,” he said.
Other experts agreed that Monday’s developments could signal the beginning of a weeding-out process.
“It will certainly put pressure on some of the companies whose valuations are too far out of line,” said Anil Puri, director of the Institute for Economic and Environmental Studies at Cal State Fullerton.
“But weeding out usually takes time. A one-day drop doesn’t necessarily do it,” he noted. “If this persists over time, it will be much harder for newer companies to raise the kind of money that has been raised” through initial public stock offerings.
Radha Bhattacharya, associate professor of economics at Cal State Fullerton, said, “Rationality is coming back into the market, and people want to move to the bricks-and-mortar companies because they are more reasonably priced and their earnings are more predictable--not as unstable as the high-tech companies.”
But the news was not all bad for Orange County’s publicly traded companies. For 38 companies in the Bloomberg Index, stock prices were up, while shares of 13 others were unchanged.
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Market Drop
The Bloomberg Orange County Index, which measures the performance of major local stocks, fell 34.04 points Monday. How the index has performed this year:
April 3: $348.21
Researched JANICE JONES DODDS/Los Angeles Times
Source: Bloomberg News
Biggest Losers
The biggest one-day drops in Orange County stocks
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Stock Net decrease Close % decreasedecrease 1. QLogic Corp. -$32.44 $103.06 -23.9 2. Emulex Corp. 25.94 83.19 23.8 3. Microsemi Corp. 5.81 28.44 17.0 4. FileNet Corp. 5.00 24.75 16.8 5. Trizetto Group 5.69 29.13 16.3 6. Meade Instruments 11.00 58.00 15.9 7. Alpha Microsystems 1.25 7.00 15.2 8. Starbase Corp. 1.38 8.00 14.7 9. Litronic Inc. 2.88 17.38 14.2 10. NetGuru 4.00 26.00 13.3 11. Cam Data Systems 2.13 14.00 13.2 12. Datum Inc. 2.94 20.13 12.7 Troy Group 3.50 24.00 12.7 13. Tickets.com 1.19 8.31 12.5 14. Procom Technology 5.69 40.06 12.4 15. Buy.com 1.19 8.56 12.2
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Researched by JANICE JONES DODDS/Los Angeles Times
Source: Bloomberg News
