Despite Y2K Drop, Tech Stocks on Tear.Whiplash whiplash n. a common neck and/or back injury suffered in automobile accidents (particularly from being hit from the rear) in which the head and/or upper back is snapped back and forth suddenly and violently by the impact. ! Last week, even before many investors had a chance to finish tallying their paper profits from 1999's record year, the Dow and Nasdaq indexes went into a tailspin tail·spin n. 1. The rapid descent of an aircraft in a steep, spiral spin. 2. Informal A loss of emotional control sometimes resulting in emotional collapse. . And while the market had rebounded somewhat by late last week, many of the highest-flying tech stocks remained well off their lofty year-end perches. Among those caught in the downdraft down·draft n. 1. A strong downward current of air. 2. A downward trend; downturn: The business hit a downdraft. was Alhambra-based Ortel Corp., the top 1999 performer in the LABJ LABJ Los Angeles Business Journal 100 index. After hitting an all-time high of $124.81 in the early hours of the first session of the year, Ortel fell as low as, $89.75 last Wednesday, Jan. 5 -- a 28 percent drop. By day's end, they had bounced back to $100.50. The moral of the story, of course, is that the biggest gainers are often the most vulnerable to a downturn. So investing in such issues is not for the faint of heart. Nonetheless, some analysts insist that investors have nothing to worry about. "When you have a record year like Nasdaq did, it's natural and healthy to take a breather Verb 1. take a breather - take a short break from one's activities in order to relax catch one's breath, rest, breathe intermit, pause, break - cease an action temporarily; "We pause for station identification"; "let's break for lunch" and correct," said Colin Higgins Colin Higgins (July 28, 1941, Nouméa, New Caledonia, France – August 5, 1988, Beverly Hills, California, United States), born to an Australian mother and American father, was an American screenwriter, director, and producer. , an analyst at Hoefer & Arnett. Indeed, while Ortel shareholders may have been chastened chas·ten tr.v. chas·tened, chas·ten·ing, chas·tens 1. To correct by punishment or reproof; take to task. 2. To restrain; subdue: chasten a proud spirit. 3. by last week's sell-off, they still are sitting on massive paper profits, considering Ortel's stock began 1999 at $8.75. "Anytime you have a stock go up, 1,000 percent, you'd be hard pressed not to want to lock in those gains," analyst Higgins said. "I'd be crazy to tell someone not to take profits on the stock." Specifically, Ortel's stock price skyrocketed 1,271.4 percent last year, in response to management restructuring and investor enthusiasm for companies that provide advanced communications hardware. In fact, the No. 2 and No. 3 performers among the LABJ 100 in 1999 are also tech stocks that fill sharply last week. Other pullbacks MRV Communications  OverviewMRV NASDAQ: MRVC is a company that designs, manufactures, sells, distributes, integrates and supports communication equipment and services, and optical components. Inc. -- which designs, manufactures and sells computer networking
Computer networking is the engineering discipline concerned with communication between computer systems or devices. products -- rose over 900 percent last year but fell as much as 22 percent last week from its 1999 close. Gemstar International Group, which develops and licenses proprietary, consumer-friendly technology systems, rose almost 400 percent in 1999 but fell 13 percent last week before recovering a bit. Analysts attributed last week's broad sell-off primarily to fears that the Federal Reserve Board might raise interest rates when its policy-making pol·i·cy·mak·ing or pol·i·cy-mak·ing n. High-level development of policy, especially official government policy. adj. Of, relating to, or involving the making of high-level policy: committee meets next month. But they were quick to point out that selling tech stocks is an understandable move by investors seeking to book profits on last year's returns. Not every top-performing L.A. stock in 1999 was from the technology sector. Guess? Inc. was the LABJ 100's fourth-best performer in 1999, rising over 350 percent from $4.81 to $21.75 a share on much-improved earnings. For its third quarter ended Sept. 25, earnings were up 93 percent and revenues were up 20 percent, compared with the year-earlier period. GoTo.com, the best performing of L.A.'s IPOs last year, was the No. 5 performer among the LABJ 100. The Web portal's stock rose almost 300 percent from its IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. price of $12 a share, ending the year at $58.75 a share. Late last week, it was trading above $70 a share. Share prices of the remaining five of the top 10 performers all rose by more than 150 percent, and they reflect the diversity of L.A.'s economy. Hot Topic Inc. is a mall-based retailer of music-licensed and influenced apparel, accessories and gift items. Learning Tree International Inc. provides education and training to information technology professionals. Univision Communications Inc. is the country's leading Spanish-language television broadcaster. And Hollywood Park Hollywood Park may be several places:
Cellar dwellers On the flip side Flip side In the context of general equities, opposite side to a proposition or position (buy, if sell is the proposition and vice versa). , the worst performers on the LABJ 100 in 1999 are an even more diverse lot. Dialysis service provider Total Renal Care Holdings Inc. and security company Protection One Inc. tied for the worst local stock performance of 1999, with each company's stock falling 77.4 percent. Infomercial maker E4L Inc. stumbled in reinventing itself as an e-commerce company, with its stock dropping almost 77 percent. Also among the 10 worst performers were Guitar Center Inc. and Dole Food Co., testament to investor disdain for stocks without any New Economy edge. That edge certainly was in abundant supply at Ortel. After suffering several quarters of losses, the company hired ex-venture capitalist Steve Rizzone in June as its new chief executive. Rizzone quickly divested Ortel of two unprofitable divisions, concentrating on the company's core business -- selling lasers and fiber-optic products to cable and phone companies. On Oct. 11, the stock was trading at around $15 when Rizzone announced that the company would report earnings of 2 cents a share for the second quarter ended Oct. 30. Because analysts had been projecting a loss of 2 cents, investors reacted positively. Ortel shares doubled in price over the next two weeks. At the same time, the value of Ortel's 18 percent share in Tellium Corp., a closely held A phrase used to describe the ownership, management, and operation of a corporation by a small group of people. In a closely held corporation, the same people often act as shareholders, directors, and officers, and no outside investors exist. provider of high-speed networking equipment, became apparent when Tellium competitor Sycamore Networks set records with its initial public offering on Oct. 22. Listed at $38 a share, Sycamore opened trading at $270 and hit a high of $328 on Dec. 31. Even after its own sell-off last week, Sycamore was trading at around $290. So despite Sycamore posting a net loss .of almost $6 million in its most recent quarter, its market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. is around $23 billion, making Tellium's anticipated IPO sometime this year a probable huge windfall for Ortel. "You can't tell me Tellium can't be as big as Sycamore," said analyst David Kang David Kang was the 23-year old Korean-Australian university student who fired a starting pistol at the Prince of Wales during an Australia Day speech at Tumbalong Park, Darling Harbour, Sydney, New South Wales, Australia, on 26 January 1994. of Cruttenden Ruth. Investors concluded likewise, sending Ortel shares from around $30 at the beginning of November to $66 at month's end. In December, the stock's momentum accelerated, pushed by an announcement that Ortel had signed a multimillion-dollar contract with a division of Lucent Technologies Inc. "The relationship with Lucent is an example of the harmonic convergence | The Harmonic Convergence was a loosely organized new age spiritual event which occurred on August 16 and August 17, 1987, when groups of people gathered in various sacred sites and "mystical" places all over the world to usher in a new era, a date based primarily on the going on within the cable industry," said Kang. Rumors that the company might be a takeover target Takeover target A company that is the object of a takeover attempt, friendly or hostile. takeover target See target company. didn't hurt the stock either, and by the end of the year, it was trading at $120. Given the run-up and future prospects, Ortel executives could afford to be sanguine sanguine /san·guine/ (sang´gwin) 1. plethoric. 2. ardent or hopeful. san·guine adj. 1. Of a healthy, reddish color; ruddy. 2. about last week's pullback. The breathtaking ride up the stock charts "validates our strategy and our technical capability," Rizzone said. "It's exciting. At the same time, you can't get overly hung up on this (stock run-up). We are looking to increase revenues, increase earnings. We're not looking to hype the stock." Best and Worst of 1999 Top and bottom 10 performers of the year among the LABJ 100 index companies.
Biggest Gainers
Price Price Percent
Company (Symbol) 12/31/98 12/31/99 Increase
Ortel Corp. (ORTL) $8.75 $120.00 1,271.4%
MRV Communications (MRVC) 6.19 62.88 916.2
Gemstar Int'l. Group (GMST) 14.31 71.25 397.8
Guess ? Inc. (GES) 4.80 21.751 351.9
GoTo.Com (GOTO) 15.00(*) 58.75 291.7
Hot Topic Inc. (HOTT) 6.44 23.25 261.2
Learning Tree Int'l. (LTRE) 9.06 28.00 209.0
Univision Communications (UVN) 36.00 102.19 183.9
Hollywood Park Inc. (HPK) 8.31 22.44 169.9
Int'l. Rectifier Corp. (IRFO) 9.75 26.00 166.7
Biggest Losers
Price Price Percent
Company (Symbol) 12/31/98 12/31/99 Decline
Total Renal Care Holdings (TRL) $29.56 $6.69 -77.4%
Protection One Inc. (POI) 8.56 1.94 -77.4
E4L Inc. (ETV) 10.69 2.50 -76.6
Tarrant Apparel Group (TAGS) 39.75 9.63 -75.8
Keystone Automotive (KEYS) 20.94 5.88 -71.9
Fremont General (FMT) 25.19 7.38 -70.7
Guitar Center (GTRC) 24.63 10.06 -59.1
Countrywide Credit (CCR) 50.19 25.25 -49.7
Mercury General (MCY) 43.81 22.25 -49.2
Dole Food Co. (DOL) 30.00 16.25 -45.8
(*) Initial public offering price, issued on June 18, 1999. [GRAPH OMITTED] |
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