Despite 2000 Decline, Valley Dot-Com a Winner
While Wall Street kicked off the millennium by taking most of tech to the woodshed, one San Fernando Valley-based company raked up share price gains that outstripped many marquee names in high tech.
For the year, Van Nuys-based GenesisIntermedia.com Inc., which gets some of its revenue from tech-related ventures, gained 194.62%. It was the largest share price gain among the 65 publicly traded companies tracked by The Times, and the second-largest gain among more than 400 Internet stocks tracked nationwide by Wilshire Associates, a Los Angeles-based investment services company.
Genesis--whose stock went from about $6 in December 1999 to $17.13 at the end of 2000--markets consumer products through a variety of channels including infomercials and Internet-enabled kiosks in shopping malls.
But if Genesis was looking for other tech companies to celebrate with, there weren’t many sipping champagne.
Nationwide, 2000 was a year that saw a reversal of fortunes for many erstwhile highfliers in the technology and telecommunications sectors.
And that pattern held true for many publicly traded companies in the Valley. Local health and finance companies took up most of the top spots on the list of the year’s five greatest gainers, while members of the former A-Team were soundly spanked.
It was a bit of tough love that industry analysts say was needed to snap investors back to reality.
“What we’re saying about 2000 is that we’ve popped the speculative bubble that we were looking at,” said Tom Stevens, senior managing director of Wilshire Associates. “So in a way this was a good thing. This gets people back to recognizing what you should be investing in and quit thinking about making an instant killing on the new hot concept.”
The results for GenesisIntermedia.com notwithstanding, the Internet sector was the worst performer among the 41 market segments tracked in the Wilshire 5000 Index of broadly traded stocks--with the sector losing 56% of its market value during the year, according to Wilshire Associates.
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Stevens said that of 420 companies in the Internet Index, only 17 had positive returns for the year, and the No. 2 company nationwide was GenesisIntermedia.com, which beat out names like Juniper Networks, Sun Microsystems Inc. and Cisco Systems.
“Looking at the market leaders, the Microsofts and the Ciscos, people who were pinning their hopes on them really suffered,” said Dave Archibald, managing director of the Portland, Ore.-based Red Chip Review, which tracks smaller companies. “ ‘Ouch’ does describe it. It was a real wake-up call to people who thought this market was going to keep going and going and going.”
Said Stevens: “It just got really ugly, really bad.”
Not for everyone.
Nationwide and in the Valley, health-related stocks were fiscally fit, pulling companies in that sector into the No. 2 and No. 3 spots on the Valley’s top five list. (Because of the volatility of low-priced, or so-called penny stocks, the comparisons used here look only at stocks trading at or above $5 per share at year’s end.)
In second place was Health Net Inc., the Woodland Hills-based managed care company that posted a 163.52% jump in share price for the year. The company, which last week upped its estimates for earnings for this year, hit a 52-week low of $7.63 in March, but closed out the year at $26.19.
Also in the health-related sector was Syncor International Corp., the Woodland Hills-based company that produces radiopharmaceutical products for hospitals and clinics. Shares of that firm gained 149.78%, to earn the No. 3 spot.
In fourth place for the year--with an annual gain of 99.01%--was Calabasas-based Countrywide Credit Industries, the parent company of Countrywide Home Loans, Inc. The company ended the year at $50.25, its 52-week high.
Rounding out the top five was On Assignment Inc., a Calabasas-based company that provides temporary and permanent job placements in biotech, chemical and other tech-related industries. Its stock, which was trading in the $13 range in early 2000, gained 90.79% to cap off the year with a price of $28.50.
Syncor and On Assignment gained for the year despite losses of 1% and 9% respectively in the fourth quarter.
The company with the highest year-end share price was defense giant Litton Industries Inc., which added 57.77% to close at $78.69.
Much of that gain came in the waning days of the year, after the company announced that it will be acquired by Century City-based Northrop Grumman Corp., the nation’s fifth-largest defense contractor. That ninth-inning run-up also gave Litton the greatest fourth-quarter share price gain among Valley companies--76.08%.
Unlike 1999, when the biggest gainers among small- and mid-cap stocks on the Nasdaq posted share price leaps beyond 1,000%, gains for 2000 across the board were more modest.
Of the Valley 65, about 43% (28 companies) saw share price growth. And of those, only four had triple-digit gains, compared with 1999 when nine companies hit that mark. Thirty-three of the Valley firms (about 51%) saw share price erosion during the year, which was about on par with 1999.
(Four companies did not trade for the full year.)
Among the companies locally to end the year in the minus column were some household names including the Walt Disney Co., down 1%; Dick Clark Productions, which lost 5.67%; and Jerry’s Famous Deli, which shed 26.44% of its share price value.
And what happened to last year’s winner, Chatsworth-based MRV Communications, which posted an eye-popping share price increase in 1999 of about 900%? The market was not so kind this year.
The company, which had disappointing results for the November IPO of its fiber-optics spinoff, Luminent Inc., ended the year down 57.45% at $13.38. That earned it the No. 2 spot among the five biggest Valley losers.
Other companies that saw the greatest slump in their share prices (among stocks trading at or above $5) were:
* Calabasas-based NetSol International Inc., down 62.29%. After hitting a high of $80 in early March, the stock sank to $4 in October, and ended the year at $7 per share. The company designs and markets software for the auto financing and leasing industry and serves as an information technology consultant.
* Motor home maker Rexhall Industries Inc. in Lancaster, which ended the year down 39.10% at $5.94.
* 21st Century Insurance Group, the Woodland Hills-based holding company, which lost 26.21% to end the year at $14.25.
* Unico American Corp., also a Woodland-Hills based insurance holding company, which shed 16.07% of its share value to end the year at $5.88.
Even though the bloodletting in tech began early in the year, several analysts picked the fourth quarter as the roughest period--a gloomy gloaming that saw only 19 Valley companies with share price gains, compared with 43 or about two-thirds of the total, below the line.
(Three firms did not trade for the full quarter.)
For the quarter, the top five Valley gainers, in order, were Litton, Health Net (up 57.52%), Dick Clark Productions (which gained 41.67%), Zenith National Insurance Corp. (up 34.29%) and Countrywide (which added 33.11%).
In the minus column for the period were MRV (down 70.48%), and Chatsworth-based Capstone Turbine Corp., which designs and assembles generators. It went public in June, shot up to $98.50 in August and ended the quarter down 59.57%.
Also losing ground during the fourth quarter was North American Scientific Inc., a Chatsworth-based company that produces radioisotopes, including brachytherapy seeds and radiopharmaceuticals. It shed 54.33%.
Next in line were NetSol, which was down 53.72% for the quarter, and Northridge-based biomed leader MiniMed Inc., down 52.97%.
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While the losses caused pocketbook pain for many, in the long run, analysts consider this a bought lesson that will serve as a taught lesson.
“The truth is that profits do matter,” said Michael Murphy, editor of the California Technology Stock Letter, who said that at this time last year, investors were acting as if they didn’t.
“The interest that people are paying to profits these days shows that they did at least learn that lesson pretty clearly.”
And, he added: “When you’re in an environment where things are going up rapidly, and you’re giddy with excitement, you have to remember that they’re going to go down. That was a tough lesson for a lot of people to learn.”
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Valley@Work runs each Tuesday. Karen Robinson-Jacobs can be reached at Karen.Robinson@latimes.com.
