Head of the Class : Led by technology firms, The Times’ report card on California’s top performers illustrates powerful business ideas driving the state’s economy.

Success in business can be measured in many ways. And by some of the most important measures, this special section chronicles California’s leading companies of 1995.

Now in its ninth year, the annual Times 100 listing is a series of snapshots of the Golden State’s most prominent, and promising, businesses--a report card, of sorts, useful to investors, employees, entrepreneurs, competitors and anyone even marginally interested in the companies that are poised to lead California into the 21st century.

By almost any yardstick the state’s major companies are an increasingly formidable force in the American and global economies.

The 100 largest California-based companies ranked by sales in 1995 had total sales of $458 billion, up 11% from 1994’s 100-largest list.

In contrast, the blue-chip Fortune 500 companies’ total sales rose 9.9% in 1995.

The 100 California companies whose stock market capitalization--that is, stock price times number of shares outstanding--was highest in 1995 had a total market capitalization of $624 billion as of April 19, up a stunning 35% from a year earlier.

That $624 billion represents about 10% of the capitalization of the U.S. stock market as a whole.

As has long been the case, many of the lists in this section are dominated by technology companies, an industry naturally synonymous with the very word California around the world.

Last year was, in fact, the biggest ever for Silicon Valley, as personal computer sales boomed, American industry invested heavily in all manner of productivity-enhancing electronic equipment, and the Internet became almost as ingrained a word in American culture as McDonald’s or Coca-Cola.

But while technology titans such as computer networker Cisco Systems, software giant Oracle Corp. and semiconductor king Intel Corp. are among the largest and most visible California corporate success stories, The Times 100 listings provide a record of the diversity of business ideas that continue to blossom in the state:

* Los Angeles-based Viking Office Products, for example, has zoomed from $100 million to $1 billion in annual sales just since 1989 by selling office products via catalog, mainly to small businesses. The company makes more than half its sales outside the United States, and its success has often been attributed to a “fanatical” devotion to customer service.

* SunAmerica Inc., another L.A. firm, is aiming to be to investment annuities what Intel is to computer chips: the 800-pound gorilla. Through internal growth and acquisitions, SunAmerica has quadrupled its earnings since 1991, to $194 million last year, finding a ready market for its mutual-fund-like annuity products in baby boomers eager to begin seriously saving for retirement years.

* In Menlo Park, Robert Half International has grown in the 1990s into the world’s largest personnel-placement firm in the fields of accounting and finance, for both temporary and permanent employees. The company, with revenue of $629 million last year, has essentially cashed in on the boom in financial services by supplying the talent that that industry needs.

The Times 100 lists also include plenty of household names, of course. Among them: Walt Disney Co., toy giant Mattel Inc., retailer Gap Inc. and the quintessential California banker, Wells Fargo & Co., which just acquired longtime rival First Interstate Bancorp.

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At the top of the official Times 100 list, however, the state’s major technology companies rule the roost.

This year, for the first time, The Times used a proprietary system to create a list of the 100 most successful California public companies of 1995.

Rather than measure success by a single variable--total sales, for example, or return on equity--the official Times 100 list that accompanies this story ranks companies using five variables, equally weighted.

Data for all of the companies were supplied by Market Guide Inc., a 13-year-old Lake Success, N.Y.-based financial information services firm.

The five variables used to determine the official Times 100 rankings:

* Market capitalization as of April 19, meaning the total value of a company’s stock. The capitalization figure tells what investors collectively think a company is worth at a given moment, however inflated or deflated that judgment might appear.

* Total sales in 1995. We included sales because that figure provides the most basic indication of a company’s success.

* 1995 percentage change in sales. Fast-growing companies ranked higher on our list, regardless of whether that growth was internal or by acquisition.

* 1995 percentage change in stock price. From investors’ point of view, this is perhaps the most important measure of a company’s success.

* Two-year average percentage return on equity. Return on equity tells how well shareholders’ invested capital is being put to work by a company’s management. We use a two-year figure to avoid giving too much weight to a single year’s return, which can be skewed by write-offs or one-time earnings gains.

We ranked 997 public California companies by each of those five variables to create the official Times 100 list. To make the final cut, however, companies had to have a particular critical mass: at least $50 million in annual sales, and at least $25 million in shareholder equity.

Some of the state’s major companies won’t be found on the official Times 100 list. Oil giants Chevron Corp. and Atlantic Richfield aren’t there, for example. Nor are California’s big electric utilities. Although massive in terms of sales and market capitalization, they are mature, relatively slow-growing businesses compared with many other companies in the state.

That doesn’t mean the missing giants are unsuccessful businesses, of course. Nor does it mean that the companies at the top of The Times 100 list necessarily are the best stocks to buy right now, or the most promising businesses in the long run.

The list is simply an effort to measure corporate performance across the board last year and to highlight those companies that appear to have the greatest momentum in their respective industries. We’re looking in a rear-view mirror at what’s behind us, to be sure--but on the highway, the rear-view mirror sometimes tells you that a vehicle is coming up fast.

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At the top of The Times 100 list is Cisco Systems, the San Jose-based leader in the computer networking industry.

With sales expected to reach $3.4 billion in the current fiscal year, up from just $70 million as recently as 1990, Cisco is benefiting from the rocketing demand to link computer systems both within individual companies and throughout the world, via the Internet and other global information networks.

Value Line Investment Survey estimates that Cisco’s networking products (routers, switches and specialized software) already account for 80% of the Internet’s infrastructure.

Moreover, Cisco has one of Silicon Valley’s best records in terms of making strategic acquisitions of smaller technology companies to complement its highly profitable core business.

Cisco Chairman John Chambers told the Hambrecht & Quist tech-stock conference in San Francisco last week that Cisco plans to make between six and eight acquisitions this year alone. “Acquisitions and partnerships are a very logical way” to help keep the company competitive in the fast-changing networking industry, Chambers said.

In one of the latest such deals, Cisco plans to buy StrataCom, a $400-million (annual sales) manufacturer of high-speed switching equipment. StrataCom is No. 9 on the Times 100 list.

In fact, four of the top 10 companies on The Times 100 list are directly involved in computer networking, a testament to the explosive growth of that industry.

No. 2 on the list, for example, is Alameda-based Ascend Communications, whose stock has been publicly traded only for two years. Ascend’s networking expertise is in linking remote computer users, such as a branch sales office, with the headquarters office computer network. In its niche, “Ascend is the company to beat,” said analyst Joe Noel at Hambrecht & Quist.

No. 8 on the list is 3Com Corp., a Santa Clara-based networker with sales estimated at $2.3 billion this year and whose corporate name now graces San Francisco’s Candlestick Park, thanks to a rich marketing fee.

If 3Com’s stadium deal suggests a certain self-confidence regarding the company’s longevity, that’s not surprising. Despite the technology industry’s boom-and-bust reputation, networking is expected to be a spectacular growth business for years to come because it facilitates moving the world’s most precious commodity: information.

“We believe the world is by far still under-networked,” said Luke T. Szymczak, analyst at Prudential Securities in New York. In particular, he says, “Small- and medium-sized businesses represent a vast untapped market.”

Continued growth in networking, and in the use of the burgeoning Internet, also could benefit many or most of the technology companies leading The Times 100 list. For example, Oracle, with its software that manages huge information databases; Intel, whose microprocessors dominate the personal-computer field; and Applied Materials, a leading producer of equipment used in the manufacturing of computer chips.

Yet, ironically, networking and the Internet also could devastate certain tech companies in coming years. If Sun Microsystems has its way, Internet users may not need complex personal computers to access the Net--just a simple Sun-designed box running Sun’s Java software.

For some investors, fear of unplanned obsolescence among technology companies drives them to look for investment opportunities elsewhere.

Ron Baron, manager of the Baron Asset stock mutual fund in New York, favors companies like Charles Schwab Corp., No. 15 on The Times 100 list. The discount brokerage industry leader, Baron says, is a savvy user of technology, taking the best that Silicon Valley has to offer and making it work to empower millions of individual investors.

In the same way, Wells Fargo (No. 49 on the list) has expertly harnessed technology for its banking business, and Callaway Golf (No. 34) uses advanced technology to turn out increasingly better golf clubs.

Technology drives the world today, of course--a fact that The Times 100 list, dominated by California’s leading tech firms, powerfully underscores.