Shares of L.A. Companies Dive in Broad Market Selloff.

Los Angeles stocks took a drubbing in the first few sessions of resumed trading after terrorist attacks closed U.S. markets for nearly a week. Walt Disney Co. and Hilton Hotels Corp. were among the local companies worst hit by the exodus from travel-related investments.

From the market reopening Sept. 17 through the Sept. 20 close, the LABJ 200 lost 14 percent of its value, or $40.4 billion, mirroring the broader market's swoon. The Dow Jones Industrial Average lost 685 points on Monday; by Thursday it had skidded 12.8 percent, or 1229 points over four sessions, to 8376. The Nasdaq Composite Index lost 224 points over the same period, a 13.2 percent setback, to 1470.93. Neither index had been as low since October 1998.

At any other time, losses of this magnitude would be considered a rout. Market professionals on both coasts felt fortunate just to get trading systems up and running so soon after the devastation in the heart of New York's financial district. Nevertheless, disappointment began to register by late last week, as it became clear that the call for patriotic stock purchases wouldn't stem the waves of selling.

"Getting through the week was one goal, but really people were very hopeful that the markets would stabilize after the first day's losses -- that institutions would step in by day two or day three and stop the bleeding," said Joe Doloboff, a mergers-and-acquisitions adviser with Ernst & Young. "The fact that that hasn't happened has a lot of people depressed."

Doloboff said that buying opportunities were present, but that many investors with cash would remain on the sidelines until the market stopped falling.

Some of Los Angeles' marquee companies accounted for the biggest share of losses. Disney, which lost nearly $14 billion of its value, fell $6.60, or 28 percent, over the first four days of resumed trading, closing Sept. 20 at $16.98. The losses reduced the company's overall value to $35.5 billion, from $49.4 billion on Sept. 10.

During trading Sept. 20, Disney's stock hit a 6 112-year low of $15.50. Each of the Burbank-based media company's main businesses is suffering in the aftermath of the attacks, as TV advertising revenue falls off, movie openings are canceled and tourists stay home from its theme parks.

Major divestiture

Disney's slide was worsened by fallout from the broader market. On Sept. 20, a large shareholder (reported to be Texas oil magnate Sid Richardson Bass) sold 135 million shares at a significant discount to market prices. Disney said it purchased 50 million of the shares, and investment bank Goldman Sachs & Co. bought the rest. Disney officials did not return calls seeking comment.

Hilton Hotels, meanwhile, saw its stock close at $6.70 on Sept. 20, 40 percent below its level 10 days earlier.

The Beverly Hills-based company, which expects business to remain depressed for six to 12 weeks, noted it would miss third- and fourth-quarter earnings estimates.

Amgen Inc., the Los Angeles area's most valuable public company, held up relatively well. Nonetheless, the Thousand Oaks-based company lost 8 percent of its value, or $5.4 billion, as money managers shifted funds from biotech to safer-haven pharmaceutical companies. Amgen shares fell to $59 at the close Sept. 20, down from $64.13 on Sept. 10.

There were some bright spots. Defense contractor Northrop Grumman Corp. led a group of defense and security-related concerns that are expected to benefit from the new wartime environment. Northrop shares stood at $101.91 at the Sept. 20 close, up nearly $20 from their closing price of $81.94 10 days earlier. During the day on Sept. 20, Northrop Grumman hit a 52-week high of $102.20.

Others in the buoyant group included OSI Systems Inc. of Hawthorne, which makes X-ray systems used to check cargo for weapons or other contraband, and Teledyne Technologies Inc., a Los Angeles maker of flight data transmission systems. OSI surged $3.81, or 94 percent over four days of trading, to $7.88 a share. Teledyne climbed to $17.40, a four-clay gain of 21 percent.

Hard-hit sectors

For the most part, though, Los Angeles companies saw their shares fall, with losses coming hardest in the Internet, entertainment, computer, communications and software sectors. One of the biggest fears of investors is the sudden drop-off in consumer spending.

Los Angeles is home to a number of specialty apparel and footwear companies, including Guess Inc., Skechers USA Inc. and Vans Inc. Each of these companies' shares fell in the double digits last week, with Vans falling 28 percent to $10.44 at the Sept. 20 close.

"People are really worried about this breaking the back of the consumer," said Gary Wedbush, senior vice president and head of trading at Wedbush Morgan.

Falling share prices aren't only affecting shareholders. They're beginning to complicate important transactions in the works. The sale of El Segundo-based Hughes Electronics Corp., a separately traded unit of General Motors Corp., may have to be postponed as the shares of Hughes fall along with those of its two suitors, News Corp. and EchoStar Communications Corp., said Scott Keller, president of DealAnalytics.com, a mergers and acquisitions research firm.

GM has been in active talks with News Corp. for more than a year. It also agreed recently to discuss a separate offer from EchoStar.

Keller said the falling stock prices of News Corp. and EchoStar make it harder for either of the bidders to justify purchasing Hughes at a premium. This is especially true for News Corp., which carries a higher debt load than EchoStar and would suffer greater dilution, Keller said.

At the same time, Hughes' falling stock price -- it closed at $12.48 on Sept. 20, down from around $20 several weeks ago -- makes it less likely that GM's management would agree to sell Hughes at all.

"I think they're debating the question of whether to put the whole thing on hold," Keller said.