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Wall Street, California / SPECIAL REPORT: MARKET PLUNGE

O.C. Sees Tech Issues Suffer Most

September 01, 1998| From Times Staff and Wire Reports

Orange County stocks went into a nose dive Monday as 10 issues lost more than 20% of their value in the market's relentless slump.

Nearly three-fourths of the companies in The Times index of Orange County stocks moved lower during the heavy sell-off. Overall, the index of 146 stocks tumbled 10 points, or nearly 6.6%, to 142.73, its lowest level in since May 9, 1997.

The county's high-technology stocks have borne the brunt of the sell-off, mirroring a trend in the general markets.

Seven of the biggest percentage losers in the county Monday were technology issues.

Indeed, smaller high-tech companies in Orange County and elsewhere have been retreating for a year, noted Michael Murphy, editor of California Technology Stock Letter. Now, industry leaders are taking their lumps.

"At the end of a bear market, you see the real leaders finally crack," he said.

The small outfits "must have been feeling sort of like the girl at the party that didn't get to dance," he said. "But it turns out that nobody's going to get to dance."

On the bright side for technology stocks, Murphy said, the bottom may be in sight.

"You can at least see how the technology stocks might be ready to start setting a bottom," he said, "while the broad market, I think, still has quite a ways to go."

Powerwave Technology topped the list of local high-tech losers, tumbling 22.2%, or $1.88, to $6.56. The Irvine company, which makes amplifiers for wireless communications networks, has been reeling from the financial crisis in South Korea, a major source of business. In the second quarter alone, Powerwave's sales there plummeted 72%, the company said recently.

Since the market began its general swoon six weeks ago, Powerwave's stock has lost 57.8% of its value.

After the market closed, Powerwave announced that it has agreed to buy Hewlett Packard Co.'s radio-frequency power-amplifier business and manufacturing facilities for $59 million.

The business, part of HP's Wireless Infrastructure division, makes amplifiers for cellular and wireless communications. The purchase will complement and expand Powerwave's product line, said Bruce Edwards, Powerwave's president and chief executive.

Although high-tech companies dominated the ranks of big losers in Orange County, Irvine consumer finance company Consumer Portfolio Services took the biggest plunge Monday, falling 57%, or $2.53, to close at $1.91 a share. It was the second-largest percentage loss in U.S. markets.

The stock has been under heavy pressure for weeks as investors questioned whether the company can raise capital fast enough to sustain its ambitious growth. Since July 17, the stock has tumbled more than 85%. Company officials could not be reached for comment Monday.

Other big losers in the high-tech sector Monday included STM Wireless, which fell 21.7%; Dense-Pac Microsystems, off 21.4%; MTI Technology, off 20.9%; Platinum Software, down 20.3%; and Wiz Technology, off 20%.

Biolase Technology's stock was one of the few bullish performers in the market. Shares of the San Clemente-based maker of medical and dental lasers climbed 19 cents, or 6.2%, to $3.25.

Despite the huge sell-off, some Orange County brokers said their customers were mostly calm.

"People are not panicking," said Ron Taniguchi, resident manager at Merrill Lynch & Co. in Seal Beach. "People are still looking for value. And they're actually looking at dipping back in, once the market settles down."

Bill Murray, a broker in Edward Jones Investments' Brea office, said his clients are, for the most part, still upbeat about the U.S. economy.

"There's no saying where we'll go from here," Murray said, "but people are generally still positive."

Still, it was a rough ride.

The market "took no prisoners," Taniguchi said. "It was just a broad-based correction."

Murphy, editor of the technology stock newsletter, predicted that the market will continue to fall unless the global markets hold steady, an unlikely prospect.

"We've got to get through the next couple of days," he said.

Murray and other Orange County brokers declined to speculate on the market's future direction, particularly where it's headed today, but they did not seem gloomy about the prospects.

"If we go back to October of last year, it's worth remembering that the single largest point drop in one business day was followed by the single largest point gain in one business day," Murray said.

Taniguchi said he doesn't believe a bear market has arrived, but he acknowledges that many people do.

"We did take a bath today," Taniguchi added, "but it's a whole new market tomorrow."

Times staff writer Leslie Earnest contributed to this report.

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How Orange County Stocks Fared

Largest percent drop from the peak of the market on July 17:

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