Valley corporate results are a study of extremes. (Up Front).

The San Fernando Valley's largest public companies came down on two opposite ends of the spectrum in the first quarter of the year--those who saw dramatic earnings increases and those for whom income dropped precipitously.

Eleven of the Valley's 20 largest public companies reported net income increased in the quarter compared to the same period last year, dramatically in many cases, but another nine companies registered earnings declines or losses that were also especially harsh.

Those that did not fare well represented a broader cross section of industries than did poor performers in the recent past, when tech companies seemed to be the only ones trailing.

At the same time, most of those companies that turned in good performances made such significant strides that, in many cases, they increased their projections for the full year as well.

While there were no clear patterns to be found, the results appear to reflect the culmination of several years of cost-cutting initiatives and the continued strength in certain pockets of the economy.

"Companies that have downsized are now reaping the benefit," said Jack Kyser, chief economist at the Los Angeles Economic Development Corp. "They're coming off easy comparisons and they've done a lot of improvements to productivity."

Among the biggest winners in the quarter were biomed giant Amgen, Countrywide Financial Corp., homebuilder The Ryland Group Inc., athletic shoe maker K-Swiss Inc. and music retailer Guitar Center Inc., all of which increased earnings for the period by more than 40 percent.

HMOs Wellpoint Networks Inc. and Health Net Inc. both recorded earnings increases of 36 percent. Earnings rose at The Cheesecake Factory Inc. by 20 percent and by 12 percent at Superior Industries International Inc.

Internet service provider United Online Inc. recorded first quarter earnings of $7 million versus a loss of $7.3 million for the comparable period last year.

With the exception of Superior, which warned that the proposed cutbacks in auto manufacturing could impact its results going forward, the strong performance seemed to buoy enthusiasm going forward.

Corporate optimism

Amgen, which reported earnings of $493.3 million on sales of $1.7 billion, increased its full year earnings guidance to $1.80 to $1.90 per share, up from previous projections of $1.70 to $1.80.

Wellpoint, which earned $193 million on revenues of $4.8 billion in the quarter, upped its full year earnings guidance to $5.50 per share from previous estimates of $5.10. Similarly, Health Net, which reported earnings of $68.2 million on revenues of $2.7 billion, increased full year earnings guidance to $2.56 to $2.60 per share, from $2.48 to $2.52.

After earning $13.6 million on sales of $115.9 million, K-Swiss revised its full year earnings forecast up to $2.05 to $2.15 per share, from previous estimates of $1.75 to $1.85 per share. And United Online bumped its EBITDA guidance for the full year to $68 to $73 per share, from $44 to $45 per share.

The biggest losers in the quarter included The Walt Disney Co., Public Storage Inc., real estate investment trust PS Business Parks Inc. and 21st Century Insurance Group, which recorded a loss of $6.7 million versus net income of $8.3 million in the first quarter of 2002.

Losses at Salem Communications Corp. widened to $6.1 million from a net loss of $1.8 million in the first quarter of 2002. And THQ Inc., citing higher marketing and selling expenditures due to the competitive video game market, recorded a net loss of $7.7 million in the first quarter of 2003 versus net earnings of $2.8 million last year.

With a few exceptions, the weak performance turned in by these companies appears to be more tied to the prevailing conditions in each industry than to the general economic climate.

21st Century, for instance, was impacted by a pre-tax charge of $37 million which the company said it would use to strengthen its reserves as a result of the reopening of some claims stemming from the Northridge Earthquake.

The company said that while it would make "fair and reasonable" payments against any claims arising from recent state legislation that extends the deadline for filing such claims, it anticipates using the majority of the reserve for legal defense. (21st Century has since discontinued offering home owner insurance.)

Competitive environment

Public Storage said its results were impacted by an increasingly competitive environment that led to an 8.4 percent rise in operating expenses, especially advertising and promotion.

For the quarter ended March 31, Public Storage spent $1.7 million on television advertising, compared to $544,000 in the comparable quarter of 2002 and its promotional costs ballooned to $11.1 million in the period, from $1.1 million in the prior year.

Perhaps because the Valley's economy has become so diversified in recent years, there were not many companies impacted by fears of terrorism and the war with Iraq or the continued shutdown in corporate capital spending, but several companies attributed their performance directly to those woes.

Disney reported a 12 percent decline in earnings to $229 million on sales of $6.3 billion in the quarter as a result of the political climate, which impacted its theme parks and broadcast division advertising revenues.

Telecommunications company Tekelec reported earnings dropped to $1.5 million from $2.5 million in the first quarter of 2002 and sales dipped to $55 million from $60.4 million last year. And although Vitesse Semiconductor Corp., narrowed its loss in the quarter, the company still posted a $25.1 million loss in the current period versus a loss of $44.4 million last year. Both Tekelec and Vitesse said continued sluggishness in capital spending largely contributed to their results.

When They Were Good

Strong First Quarter Raises Full Year Expectations.

            Revised FY Guidance  Previous FY Guidance
Company         (per share)          (per share)

Amgen          $1.80 - $1.90        $1.70 - $1.80
Wellpoint          $5.50                $5.10
Health Net     $2.56 - $2.60        $2.48 - $2.52
K-Swiss        $2.05 - $2.15        $1.75 - $1.85