Stock shock: Billions of dollars in market equity evaporate Chad Eric Watt Senior Staff Writer ORLANDO ? With or without Sept. 11, Central Florida's publicly traded stocks already were headed for a downturn by September 2001. The high-flying 1990s had pushed things too high, says Ed McDonough, an Orlando financial planner. "Valuations were out of whack," McDonough says. "We were in a bubble." Still, the wealth lost is staggering. A survey of 26 publicly traded companies either based in Central Florida or with significant operations here revealed they have lost a combined $48 billion in market capitalization since Sept. 11. Market cap ? the stock price multiplied by shares outstanding ? is one key measure of a public company's worth. The drop in market cap is quite a switch from early 2001, both for individual investors and publicly traded corporations. At the end of August 2001, this same group of companies could boast a combined market cap of more than $216.5 billion. At the close of August 2002, that total had fallen by nearly 22 percent to a sum of $168.8 billion. Vivendi Universal, Walt Disney Co., Convergys Corp. and AirTran Airways led the losses. Yet Vivendi and Disney's stock market losses have come primarily in the last few months, well after Sept. 11 shook both the market and the leisure industry. In Vivendi's case, a summer sell-off was prompted by that company's excessive debt. Disney did report gloomier than expected theme park attendance, but its stock slide is also widely believed to have been part of a larger disillusionment with media stocks in general. In fact, a number of factors converged to pop the bubble, but an analysis of local stocks prior to and after Sept. 11 show those factors were poised to intersect before the terrorist attacks. Corporate spending already had started slowing. That hurt the markets, and technology companies in particular. Then, the malaise filtered into other sectors. Sept. 11 brought the market to a screeching halt. "We've gone under a huge revaluation," says McDonough. "Whether this is normal, no one knows." Whatever the cause, low market capitalization makes it more difficult for a public company to make acquisitions, says Jack Greeley, a partner in the Orlando law firm Smith, MacKinnon, Greeley, Bowdoin & Edwards P.A. It also can put a company's credit situation in jeopardy. "Some companies have borrowings that may have a market cap covenant," says Greeley. Should a company lose some of that value, the nature of its debt agreements could change. Further, national stock markets typically require a minimum share price and market capitalization. That may not impact a large company such as Disney, even though it has lost millions of dollars in market cap. However, many publicly traded companies in Central Florida are small cap stocks. Of the 26 tracked in the Orlando Business Journal survey, 14 had market caps of less than $1 billion. Seven were trading at less than $10 per share ? before Sept. 11. Beyond regulatory and financial complications, dwindling stock value and market capitalization can hurt employee morale, Greeley says. But many believe employees and shareholders alike will have to continue to deal with low share prices for a while. Financial planner McDonough, for one, says he doesn't believe the markets have reached the bottom of this bear market yet. "It tends to go to excesses in both directions," he says.