For a crisp snapshot of California's diverse economy, check out the companies topping this year's Times 100 list.
The companies giving their shareholders the most for their money are making software to run printers and selling mutual funds, active sportswear and X-ray machines.
Adobe Systems, the Mountain View software maker, topped the list for the second year in a row, despite a stock price plunge earlier in the year. The company, which makes software to control printers, posted record earnings of $40.1 million in 1990.
The key to its success has been to license its software to other companies, including Apple Computer, which uses Adobe's PostScript software for its computers and laser printers.
Adobe Chief Executive "John Warnock has one of the most elegant minds in the business," said Esther Dyson, editor and publisher of Release 1.0, a Manhattan-based software industry newsletter.
"Their business is creating and packaging intellectual property," Dyson said. "Computer makers realize it is cheaper to buy the software from Adobe than do it themselves."
Adobe's 56.7% two-year average return on equity reflects a 19% increase in income during the year. In 1990, Adobe posted revenue of $168.7 million.
The Times 100 is based on data compiled and analyzed by MZ Group, a San Francisco-based business research firm. To qualify, a company must be headquartered in California and have sales greater than $50 million. The stock must also have been been trading publicly since 1987. Companies must have been profitable and have debt less than two times equity.
The list is based on return on equity, which is figured by taking a company's income minus preferred stock dividends and dividing it by average common shareholders equity. Special one-time gains are not counted as income.
United Television, second on the list, owns radio and television stations, while Syntex Corp. placed third on the list with an impressive 47.7% two-year average return on equity.
Cash-rich WD-40, maker of the lubricant found in nearly everyone's tool kit, climbed to the No. 4 slot from No. 8 last year. Mattel continues to dominate the toy market with its Barbie dolls, jumping from No. 14 last year to No. 5.
Sixth-ranked Franklin Resources, the investment management firm that topped the list in 1988, continues to benefit from a consumer shift from spending money to saving it. Quantum Corp., cashing in on the popularity of its computer storage devices and providing shareholders an impressive 37.5% two-year average ROE, soared to No. 7 from No. 40.
Overall return on equity figures dipped slightly, with the 1990 cutoff falling to 14.8% after having risen three years in a row. Even Adobe's return on equity was depressed as well, 56.7% compared to 63.8% last year. The median two-year return on equity for 1990 dipped to 20.8% from 21.8%.
Here is a closer look at the top 10 companies on the list:
1. High-flying Adobe Systems is the dominant maker of software that controls how printers draw typefaces.
The company has been buoyed by licensing agreements with large makers of computer and printer hardware.
However, earlier in the year, Adobe's stock price plunged after the company lowered profit projections for the second quarter of 1990 because of slow sales at Apple Computer, which pays Adobe a royalty for using its software in Apple laser printers. At the time, many Wall Street analysts called the selloff an overreaction.
2. Beverly Hills-based United Television moved up three spots on the list, even though its 1990 net income fell 22%.
At its helm is colorful New York financier Herbert Siegel, who also heads Chris-Craft Industries Inc. Through interlocking ownership, the two companies plus BHC Communications control seven TV stations, including KCOP-TV in Los Angeles.
3. Drug manufacturer Syntex Corp. of Palo Alto has been a resident of the top 10 of The Times 100 since its inception in 1988.
More than half of the pharmaceutical company's sales and earnings come from two anti-arthritic drugs. Those sales continue to increase. However, the patent on one of those drugs expires in 1993.
An aggressive research program has resulted in several new drugs to treat a variety of ailments. Some analysts contend that the new portfolio of drugs is the strongest in the industry and could add to Syntex's bottom line for years.
4. All those blue and yellow cans of WD-40 have kept their manufacturer, WD-40 Co. of San Diego, in the top 15 of The Times 100 since 1988. The familiar all-purpose lubricant is one of the earliest commercial spinoffs of the space program. Its name stands for "water displacement, 40th formula," and the product was developed to solve a corrosion problem on the Atlas missile in 1955.
