On average, the 15 largest companies in the San Fernando Valley saw net income increases of 15 percent on revenue increases of 7 percent in the second quarter of 2005. Only one of the companies in the group reported a net loss in the quarter, with another two of the Valley’s largest publicly-held companies reporting net income declined versus the comparable period last year. Meanwhile, seven of the largest publicly-held companies reported net earnings increased in excess of 30 percent. The earnings performance turned in by the Valley’s largest companies was somewhat better than the national scene where companies averaged just under 12 percent increases in earnings. “It looks like you’re in a pattern where earnings are going to be in the low to mid-double digit range,” said John Butters, research analyst with Thomson Financial. The worst performances among the largest Valley-area companies were turned in by Countrywide Financial Corp. and 21st Century Insurance Group, which reported net earnings declined by 28 percent and 4 percent respectively. 21st Century’s net income dipped to $20.5 million while its premiums written rose slightly to $328.7 million from $324.8 million in the quarter. Countrywide reported net income of $566 million or $0.92 per diluted share on a 3 percent increase in revenues to $2.3 billion for the second quarter of 2005. That compared with earnings of $786.5 million or $1.29 per share on revenues of $2.5 billion for the second quarter of 2004. Although loan production in the quarter exceeded analysts’ expectations, Countrywide said it opted to bank much of that volume instead of selling the loans to the secondary market. But analysts point out that the company also saw lower returns on those loans it did sell to the secondary market and values on its loan servicing business were lower than anticipated. Loan margin gains and valuations on servicing loans tend to be two volatile areas of the business, but some analysts also note that Countrywide could face continued challenges if the mortgage market weakens. “My concern is that in a more challenging mortgage environment their strategy of continuing to grow volume is going to challenge profitability,” said Frederick Cannon, an equity analyst with Keefe, Bruyette & Woods Inc., which has an underperform rating on the stock. Ixia, a Calabasas-based provider of IP network testing systems reported the highest increases, with a jump of 175 percent in its net earnings and a 54 percent increase in revenues, followed by Zenith National Insurance Corp., which reported net income rose 87 percent and revenues rose 34 percent. Ixia reported net income of $9.8 million or $0.14 per share on revenues of $41.3 million, thanks in part to increased orders from a number of its customers. “While sales to network equipment manufacturers and our largest customer, Cisco Systems, were especially strong, we had more than 10 customers ordering over $500,000 in equipment, pointing to a broader underlying demand for our products,” said Errol Ginsberg, president and CEO of Ixia. At Zenith, where net income for the quarter rose to $46.4 million or $1.90 per share on revenues of $332.2 million, officials said the strong results were attributable to a 29 percent increase in net premiums earned for Workers’ Compensation insurance and what Stanley R. Zax, the company’s chairman and president called “continued favorable claim cost trends.” Although Valley companies as a whole averaged only a 7 percent growth rate in revenues, several saw far more substantial increases. THQ Inc., the Calabasas Hills-based video game maker saw revenues rise by 79 percent to $158 million, although the company reported a net loss of $4 million due in part to increased expenses associated with the launch of several new titles. ValueClick Inc., the Westlake Village-based provider of online advertising and marketing services, reported a 58 percent increase in revenues to $54.6 million. Income at the company rose 47 percent to $8.1 million. Of the 480 companies that have thus far reported second quarter results across the country, income growth averaged 11.9 percent versus last year. “That was above projections of 8.8 percent,” Butters noted.