For young, publicly held companies in Orange County, finding a small place in the corporate world can lead to big riches.
Dozens of local firms have become national and world leaders in small markets, making Orange County one of the nation's hottest spots for small business. And they dominate those markets with as little as $100 million in sales, according to county economists and statistics from The Times 100 survey.
AST Research, for instance, is the industry leader in manufacturing add-on memory boards for IBM compatible personal computers. Archive is the nation's leading maker of computer back-up tape drives. Armor All Products is the top maker of car appearance-care products. Bergen Brunswig is the second largest U.S. drug wholesaler. Gradco is the world's largest supplier of sheet feeders and collators for copiers and printers. National Education is the world's largest vocational training company. And with 338 retail outlets nationwide, Clothestime in Anaheim has carved out a discount market in clothing for young women.
The list goes on.
"And the real gold in the hills of Orange County are the private companies getting ready to go public," said Jeffrey Kilpatrick, president of Newport Securities in Costa Mesa. "Their number is probably unequaled in the country."
FileNet in Costa Mesa, for instance, is a 5-year-old firm that went public in July and quickly sold out its $25-million offering. It is the pioneer and leader in using an optical disk device to copy and store documents--the cutting edge of the often heralded "paperless" office.
Figures from The Times 100 survey and other sources highlight the diversity, prosperity and small size of the county's publicly held companies:
* Nine county-based companies, representing a cross-section of industries, are among the first 50 firms in The Times 100 list, a healthy representation in a state with so many stand-out corporate performers.
* Overall profits from continuing operations were skewed by four big money losers--FCA, Care Enterprises, ICN Pharmaceuticals and the county's largest firm, Fluor Corp., which may have turned the corner with a profitable first quarter this year. Without those four, the county's public firms did quite well--posting $379 million in profits from continuing operations. With the big losers, however, the companies sank into red ink by $214.5 million.
* None of the top six companies in shareholder returns--all with two-fold to five-fold increases over the last 15-month period--ranked among the biggest 25 county firms in revenues. Bridgford Foods, a manufacturer and distributor of snack foods, was on top with a 272% return--even though it rang up only $56.5 million in sales last year.
* The market value of a number of small companies, such as Armor All Products with $108 million in sales, often exceeded that of larger companies, such as Bergen Brunswig with $3.4 billion in sales. On April 4, Armor All's market value was nearly $100 million higher than Bergen Brunswig's, and its ratio of market value to book value was almost triple that of its giant neighbor.
The Times survey, which included a review of Orange County's 143 largest publicly held companies, indicates that county-bred companies tend to be concentrated in a few industries, said Kevin Colosimo, a partner in MZ Group, the San Francisco consulting firm that conducted the study.
The biggest concentration is in high technology, which accounts for 28% of the firms. It is followed by heavy industry--primarily Smith International--with 11%, health services with 9%, bio-tech and biomedical firms with 8% and financial services with 7%.
Those numbers, though, exclude such known quantities as the large financial services industry made up mostly of banks, savings and loans and hundreds of mortgage companies, all of which are private or too small to be included in The Times 100 survey.
More importantly, the concentration of county firms does not take into account the county's biggest source of revenue--aerospace and defense. Such firms as Rockwell International, Hughes Aircraft, McDonnell Douglas and Ford Aerospace are among the county's biggest employers and haul in most of the federal defense funds spent in the county. But they are based elsewhere.
No major county-based firm is classified in the aerospace or defense industry, yet it is probably the only single industry in which a major cutback in federal spending could significantly affect the county's economy, said James Doti, dean of the Chapman College School of Business in Orange.
The emphasis on emerging companies and new enterprises is so great that sometimes the area's graybeards get overlooked. They, too, have prospered by carving out niches for themselves.