Although more than half of Orange County's 50 largest public companies suffered drops in their total market value over the past calendar quarter, the deepest declines were recorded by those in high-tech and health-care related fields, where some stock values slid as much as 47% during the three-month period.
Overall, Orange County's top 50 publicly held companies decreased in value by 7%, contrasted with a decline of 1% for the Dow Jones Industrial index during the three months ended Sept. 30.
Nevertheless, several companies rose in value during the quarter. Gradco Systems Inc. posted the strongest gain in value, increasing by a hefty 38%. During the third quarter, the Santa Ana-based company, which manufactures paper-handling devices, increased in value to $48.3 million.
Other companies showing strong gains during the quarter included ClothesTime Inc., which increased by 37% to $158.3 million, and Farwest Financial Corp. of Newport Beach, which increased in value by 26% to $74.7 million.
But not all Orange County companies did so well. Especially hard-hit during the quarter were some hospital and pharmaceutical firms, whose declining values reflect the woes that have beset the healthcare industry.
Despite steady profits, local firms such as Comprehensive Care Corp. of Newport Beach and Lake Forest-based Westworld Community Healthcare Inc. have suffered from the malaise that affects the health-care industry, analysts said.
Although Comprehensive Care remains near the top of The Times' list of Orange County's largest publicly held companies, its value dropped by 47% to $235.1 million during the third quarter. Westworld's decline was a more modest 40%, leaving the rural hospital operator No. 31 on the list at $68.8 million.
"What you are witnessing is a mass reaction to some really disappointing earnings for some of the major companies in the health-care group," said Larry Selwitz, an analyst with Bateman Eichler, Hill Richards Inc. of Los Angeles.
Selwitz said increased price competition among hospitals and other health-care providers, along with a decrease in the number of patients, has led to a depression in the health-care industry that affects even profitable companies.
"Even for the companies that are doing real well, they still are moving in concert with the group," Selwitz said. "If you have a nervous investment community, particularly with health care, they are likely to focus on anything. If you are clean and have good earnings, you are still facing tremendous pressure on stock prices."
Certain high-technology issues also fared badly during the quarter.
Irvine-based Western Digital Corp. dropped 41% in value, to $151.5 million. Helionetics Inc., a Santa Ana company that specializes in lasers, declined 40% in value to $21 million, while Silicon General Corp. of Garden Grove fell by 26% to $60.3 million. Of the three, however, Helionetics was the only company to drop off The Times' list.
Although little improvement is expected during the fourth quarter, 1986 may present a rosier picture for Orange County's public issues. Cal Mead, a broker with E.F. Hutton in Costa Mesa, said that the outlook for next year may be better.
"I don't expect much improvement before the end of the year because of tax-loss selling," Mead said. "I think we have a big market ahead of us, but when it's going to get here, I don't know."