'It's choking the lifeline'

Losses will make it harder to borrow money, expand

Publicly traded companies in Massachusetts have lost nearly $200 billion in value since the stock market peaked a year ago, a historic decline that has taken a heavy toll on most of the state's key industries, including the financial, high-tech, and life sciences sectors.

The 39 percent drop in the companies' stocks mirrors the 40 percent decline in the Dow Jones industrial average and the 43 percent erosion of the S&P 500, according to the Bloomberg index of 234 Massachusetts firms. Only a dozen local stocks have increased in value since Oct. 9, 2007.

"It's certainly sobering to all of us," said Brian Gilmore, executive vice president of public affairs for Associated Industries of Massachusetts, a trade group.

The dramatic downturn means companies have less access to money for expansion projects and other needs. The problem is compounded by paralysis in the credit market, which has made it difficult for corporations to borrow from banks and other lenders.

"The net impact on Massachusetts will be substantial," said Sara Johnson, managing director of global macroeconomics at Global Insight Inc., a forecasting firm based in Lexington. "It's choking the lifeline" for companies, she said.

Johnson said the dramatically lower stock mar ket and credit crunch could have a particularly damaging impact on the region's young high-tech and life sciences companies, which sorely need access to outside cash to grow. Many start-ups have been forced to put off plans to launch initial public stock offerings. "This will have a very debilitating impact on new and vibrant companies that we depend on," Johnson said.

Plunging stock values could hurt Massachusetts in other ways as well. Strapped for cash, companies may lay off workers or cut other spending to try to shore up profits. And falling stock prices also reduce the value of employees' stock holdings, options, and bonuses, which in turn could curtail the amount of money they pay in taxes or spend at restaurants and shops.

Some of the state's largest corporations, including EMC Corp., Raytheon Co., Staples Inc., TJX Cos., and Thermo Fisher Scientific Inc., have all seen double-digit declines in their stock prices over the past year as the economy soured and panic spread through the world's financial markets. The stock market pain has been spread across industry sectors, too - The Boston Globe/Bloomberg Massachusetts Technology Index fell 41 percent, while the Life Sciences Index slipped 39 percent, similar to the decline in Massachusetts stocks overall.

Boston's First Marblehead Corp., a key player in the student loan market, has been especially hard hit over the past year, losing 96 percent of its stock value. First Marblehead has long worked with major institutions to administer student loans and package them into securities that can be sold to investors. But because of the upheaval in the financial markets, the company hasn't been able to sell any student-loan bundles in more than a year, eliminating most of its revenue.

In May, the company cut 500 jobs in Boston and Medford, half its workforce. And in August, it replaced its chief executive with one of its cofounders. A company spokesman declined to comment on the stock's sharp drop in value.

Meanwhile, Springfield firearms maker Smith & Wesson Holding Corp.'s stock has tumbled 89 percent.

The company, which has reduced its workforce and reported lower profits, has blamed the nation's economic slowdown for hurting its sales.

"Access to credit and capital is an issue for companies of all sizes right now," said Dan O'Connell, the state's secretary of housing and economic development. "A restoration in confidence in the market is needed."

Some companies, however, were struggling long before borrowing became difficult.

For instance, Ibis Technology Corp., which sells multimillion-dollar equipment used to manufacture microchips, said it hasn't sold any of its machines since 2005. The Danvers firm hired an investment bank in February to consider its options, including selling the company.

Also, several biotech companies reported disappointing results from clinical trials for their experimental drugs, results that were unrelated to the economic woes.

They included Epix Pharmaceuticals Inc. of Lexington and CombinatoRx Inc. of Cambridge.

Still, a dozen companies' stock prices have risen, bucking the trend. Covidien Ltd., the Mansfield company that sells a broad range of medical devices and health products, saw its shares rise slightly, about 1 percent.

A company spokesman said the company, which has 2,000 local employees, has benefited both from a niche in a strong industry and an effective strategy.

"Healthcare is an industry that doesn't experience some of the difficulties other industries have," said Covidien spokesman Eric Kraus. But he added, "You have to produce results."

Other gainers included Clean Harbors Environmental Services, a Norwell company that offers environmental cleanup services, and Haemonetics Corp., a Braintree company that makes automated blood processing systems.

Todd Wallack can be reached at twallack@globe.com.