THE TIMES 100 : The Best Performing Companies in California : THE VIEW FROM THE STREET : 1991 a Big, Volatile Year for Initial Public Offerings : Stock: About $2.2 billion was raised by 76 California businesses. Many trade lower than the initial price.

For California companies selling their stock to the public for the first time, 1991 was a banner year. Led by high-technology companies and firms in the medical field, 76 California businesses went public last year--one-fifth of the national total--raising about $2.2 billion from investors.

Not everyone who bought those shares is in the mood to celebrate. The stock of one-third of the California firms that went public last year is trading at a lower price than it initially sold for. Among the big losers are Cherokee, the Sunland-based clothing maker, and Citation Insurance Group, a San Jose-based provider of workers’ compensation insurance.

The stars are technology firms with such scientific-sounding names as Zilog, a Campbell-based computer chip designer, and Aphton, a Woodland-based biotechnology company.

Zilog specializes in custom-made integrated circuits for such devices as answering machines and video game consoles, and reported a 19% jump in profits last year. Aphton doesn’t have any products, but investors are encouraged by deals the firm has with pharmaceutical giants Ciba-Geigy and Johnson & Johnson, according to Douglas Eayrs, an analyst with John G. Kinnard & Co. in Minneapolis.

The wide variation in the performance of the new issues shows how rewarding--and how treacherous--investing in new public companies can be. With initial public offerings, the name of the game is volatility.

Take the case of Citation Insurance. Two months after going public, the company noticed a disturbing rise in what it believed to be fraudulent disability claims. The company disclosed the news to investors, and its shares promptly tumbled. The stock price has remained low as bad news has continued to flow from the company.

Though stock shopping can be tricky, investors eagerly snapped up new issues last year because the stocks held out the promise of greater returns than investments in well-established blue chip companies, bank deposits and mutual funds. Anyone fortunate enough to buy shares of Broderbund Software has more than doubled their investment--at least on paper. Many companies were happy to feed investors’ appetite for new issues because it is a cheap way to raise money. Though low interest rates made it inexpensive to borrow, lenders are reluctant to finance companies that lack long track records or, in some cases, products.

“Banks demand small companies to sign over the business, the wife, the children and everything else,” said Bob Mescal, a research analyst for the Ft. Lauderdale-based New Issues newsletter.

Mescal expects the flood of new issues to continue this year because investors are still looking for better-than-average returns and companies are always looking for low-cost money. If the economy recovers and business prospects improve, the amount of money raised in initial stock offerings this year could reach a record-breaking $30 billion this year, he said, up from $22.2 billion in 1991.

There’s no way to be sure you’re picking a winner, but Mescal says there are things to ask about.

* Why is the company selling stock?

* Do executives earn more than the company looses?

* How much say will shareholders get in the company’s affairs? Despite the pitfalls, the Times IPO list shows gainers outnumbered losers by about 2 to 1. According to Mescal, that’s pretty good. He said that on average, half of all IPOs sink below their offering price within six months.

IPOs: How They Fared

Companies ranked by change in stock price since initial 1991 offering.

% Change 4/10/92 Offer Rank Company in Price Price Price 1 Broderbund Software 154.5 28.00 11.00 2 Aphton 135.7 16.50 7.00 3 Zilog 120.5 24.25 11.00 4 Sybase 105.6 27.75 13.50 5 Aramed 102.5 40.50 20.00 6 SyQuest Technology 95.2 20.50 10.50 7 Applied Immune Sciences 91.7 23.00 12.00 8 BWIP Holding 91.4 27.75 14.50 9 Quantum Health Resources 89.6 22.75 12.00 10 Cygnus Therapeutic Systems 84.7 16.63 9.00 11 Read-Rite 76.1 20.25 11.50 12 Quarterdeck Office Systems 75.0 17.50 10.00 13 SyStemix 75.0 31.50 18.00 14 Glycomed 71.4 12.00 7.00 15 Meris Laboratories 70.3 15.75 9.25 16 Cor Therapeutics 66.7 12.50 7.50 17 Fortis 65.0 16.50 10.00 18 IHOP 60.0 16.00 10.00 19 Insurance Auto Auctions 59.1 17.50 11.00 20 Vitesse Semiconductor 58.3 14.25 9.00 21 Special Devices 57.9 15.00 9.50 22 State of the Art 52.8 13.75 9.00 23 Total Pharmaceutical Care 52.2 17.50 11.50 24 GranCare 51.2 15.50 10.25 25 Retix 50.0 13.50 9.00 26 Take Care 50.0 28.50 19.00 27 Supercuts 46.6 16.13 11.00 28 Intervisual Books 41.7 4.25 3.00 29 Thermo Electron Technologies 40.6 16.88 12.00 30 Cenfed Financial 40.0 14.00 10.00 31 Homedco Group 40.0 21.00 15.00 32 Vans 37.5 19.25 14.00 33 Qualcomm 34.4 21.50 16.00 34 American Biodyne 30.0 13.00 10.00 35 Beverly Hills Fan 25.0 2.50 2.00 36 Hamburger Hamlet Restaurant 25.0 14.38 11.50 37 Preferred Income Fund 22.5 18.38 15.00 38 Presley 17.5 11.75 10.00 39 Jenny Craig 14.3 24.00 21.00 40 Sports Media 11.3 5.56 5.00 41 Smart & Final 9.9 20.88 19.00 42 Barra 9.5 11.50 10.50 43 Advanced Photonix 6.3 6.38 6.00 44 Pharmchem Laboratories 5.9 9.00 8.50 45 Micronics Computers 4.2 6.25 6.00 46 Ross Systems 3.8 10.38 10.00 47 Anergen 3.1 8.25 8.00 48 Sierra Semiconductor 3.1 16.50 16.00 49 Vision Ten 0.3 3.01 3.00 50 Custom Chrome 0.0 10.00 10.00 51 Isis Pharmaceuticals 0.0 10.00 10.00 52 Alliance Imaging -8.8 7.75 8.50 53 Koll Management Services -10.0 9.00 10.00 54 Harmony Holdings -12.5 2.63 3.00 55 Athena Neurosciences -14.6 10.25 12.00 56 Genta -15.0 8.50 10.00 57 Sam & Libby -15.5 12.25 14.50 58 Leslie’s Poolmart -15.9 9.25 11.00 59 Aames Financial -16.3 8.38 10.00 60 Pacific Physician Services -18.2 9.00 11.00 61 Veterinary Centers of America -22.9 4.63 6.00

Source: IDD Information Services Inc. and MZ Group

Biggest IPOs

California-based firms ranked by dollar amount of offering.

Offering Rank Company ($ millions) 1 Jenny Craig 105.0 2 Preferred Income Fund 100.5 3 Smart & Final 95.0 4 BWIP Holding 92.8 5 Atmel 58.5 6 Vans 57.4 7 Presley 56.0 8 Homedco Group 55.5 9 Qualcomm 51.2 10 Aramed 50.0 11 IHOP 49.6 12 Sybase 49.6 13 Take Care 47.5 14 Athena Neurosciences 46.2 15 Idec Pharmaceuticals 45.0 16 Read-Rite 40.6 17 Sam & Libby 39.9 18 SyStemix 36.0 19 Broderbund Software 35.8 20 Quarterdeck Office Sys. 34.0 21 Sierra Semiconductor 32.0 22 Applied Immune Sciences 31.2 23 Quantum Health Resource 30.0 24 Adv. Interventional Sys. 29.9 25 SyQuest Technology 29.4 26 Hamburger Hamlet 29.0 27 Vitesse Semiconductor 28.8 28 Leslie’s Poolmart 27.8 29 GranCare 27.7 30 Ross Systems 27.5 31 Cygnus Therapeutic Sys. 27.0 32 State of the Art 27.0 33 Pulse Engineering 26.8 34 Genelabs Technologies 25.6 35 Retix 25.2 36 Custom Chrome 25.0 37 Genta 25.0 38 Isis Pharmaceuticals 25.0 39 Alliance Imaging 23.8 40 Insurance Auto Auctions 22.9 41 Teknekron Comm. Sys. 22.5 42 Zilog 22.0 43 Pac Rim Holding 19.9 44 Meris Laboratories 19.7 45 Total Pharmaceutical Care 19.6 46 Centigram Comm. Sys. 19.4 47 Supercuts 19.3

Source: MZ Group, IDD Info. Services