No return to returns of old

Bill Gross, widely considered the country’s top bond-fund manager,

told a group of investors in Costa Mesa on Wednesday that

double-digit stock returns are a thing of the past.

At a luncheon at Hilton Costa Mesa, the Newport Beach-based Gross,

who manages the $75.8-billion Pimco Total Return Fund, cautioned

investors about the “low-return world” on Wall Street for the

foreseeable future, a spokesman with Pacific Investment Management Co

said.

Gross spoke to the nonprofit Women Investing in Security and

Education, or WISE. About 200 guests attended the event, including

group board member and CNBC host Consuelo Mack. Her interview with

Gross aired on the network Friday morning.

In his remarks, Gross warned investors about high money management

fees. He said municipal bonds are now undervalued and pointed to

Chinese currency acceleration as the key to a U.S. economic recovery.

DOWNEY FINANCES

DOWN A BIT

Downey Financial Corp. of Newport Beach on Thursday reported a

9.3% drop in net income for the second quarter.

The holding company for Downey’s banks said it logged $18.5

million, or 66 cents, on its bottom line, down from $20.4 million, or

72 cents, a year ago. The lender said its operating expenses rose

13.8% to $51.3 million during the quarter.

DSL closed Friday at $42.45, a 1.16% fall on the day.

WATER PIK HAS FLAT QUARTER

Newport Beach-based Water Pik Technologies Inc. reported flat

quarterly income, even though the company said it raised revenue

during the second quarter from a year ago.

Water Pik, on Thursday, reported $3.8 million, or 31 cents per

share, which was in line with the $3.8 million the company earned in

the second quarter of 2002.

Sales for the second quarter came in at $76.5 million, a 5.7%

increase from the $72.4 million the company recorded a year ago.

“We are encouraged by our sales growth during the quarter, despite

the challenging economic conditions,” Chief Executive Michael Hoopis

said. “New products and retail distribution gains continue to drive

the sales growth” for the company.

Water Pik competes in three market segments, including personal

health care, pool products and heating systems. Most notable, at

least to home improvers, is the company’s line of showerheads and

electric toothbrushes.

The personal health care division contributed $29.8 million to

quarterly sales, which was a 4.9% improvement. The pool products and

heating systems division chipped in $46.7 million, a 6.1%

improvement.

The company said it was on track to meet its outlook for 2003. PIK

rose 4.14% on Friday to close at $8.30.

ARMOR MAKER LANDS ANOTHER ORDER

Ceradyne Inc., the Costa Mesa high-tech ceramics maker, announced

Thursday that it has signed a $7.1-million contract with the Army for

its ballistic personnel armor.

The company signed the deal with the Defense Supply Center

Philadelphia; it said it would fill the order by the end of the year.

The military has used Ceradyne’s armor in Iraq, Kosovo and

Afghanistan, among other areas.

This latest contract is the third such deal so far this year,

after $17.5 million in other contracts.

Earlier this year, the company expanded its Irvine plant to

accommodate the additional work.

“We are very pleased to receive this order,” Chief Executive Joel

Moskowitz said. “We expect to meet the expedited deliveries of this

new order because of the additional capacity, which was recently

brought on stream within out 41,000 square-foot Irvine facility.”

GETTING ON THE RUSSELL

Ceradyne and another local public company have been added to the

Russell 2000 index, a leading equity measure of small-cap companies.

Effective July 1, Ceradyne and Newport Beach aerospace services

provider SM&A; are included in the index, which is updated each year.

CRDN closed Friday at $17.83 for a 1.18% rise. WINS also popped,

for a 4.16% spike on Friday.

The Frank Russell Company’s indexes are widely used by money

managers as benchmarks for active and passive investing strategies.

* PAUL CLINTON covers the environment, business and politics. He

may be reached at (949) 764-4330 or by e-mail at

paul.clinton@latimes.com.