Monday February 4 1:38 PM ET
Telecoms Stocks Battered by Liquidity Concerns
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CHICAGO (Reuters) - Telecommunications stocks fell sharply and shares of at least five companies dropped to all time lows on Monday as investor concern over the industry's health intensified on the heels of bad news by Global Crossing Ltd. (GBLXQ.PK), WorldCom Inc. (Nasdaq:WCOM - news) and Williams Communications Group Inc. (NYSE:WCG - news).
Shares of Williams fell 40 cents, or 28.17 percent, to $1.02 on the New York Stock Exchange (news - web sites), and shares of WorldCom fell $1.59, or 16.55 percent, to $8.02 on Nasdaq. Shares of Level 3 Communications (Nasdaq:LVLT - news) fell 26 cents, or 8.64 percent, to $2.75 and shares of Sprint Corp. (NYSE:FON - news) were off $1.46, or 8.48 percent, at $15.76.
Williams, Sprint and WorldCom were among the top percentage losers. Sprint and WorldCom stocks also reached all-time lows according to Reuters Analytics. On a wider basis, the North American telecommunications index was off 3.78 percent at 714.15 in midday trade.
``Given the current state of the environment, people are worried about what's going to happen with liquidity issues,'' William Benton, analyst with William Blair & Co., said. ''Everyone is looking for any sign (of a problem) and it's not hard to find them right now, unfortunately.''
High-speed communications network operator Williams said earlier that its banks had warned that it may be in default under its credit agreement. Global Crossing is facing an investigation of its accounting methods by the U.S. Securities and Exchange Commission (news - web sites), and WorldCom continues to face pressure amid concerns about its debt ratings.
``It's just a host of bad news around telecom,'' Frank Marsala, analyst with Robertson Stephens, said. ``The market stinks. The market for telecom is under additional pressure . It's just affecting every stock in the group right now.''
Wireless stocks were also hit hard as investors focused on the growing sector's funding needs.
Shares of No. 4 wireless operator Sprint PCS Group (NYSE:PCS - news) fell $1.63, or 10.46 percent to $13.96, shares of No. 3 AT&T Wireless Services Inc. (NYSE:AWE - news) fell $1.19, or 10.76 percent, to $9.87, and shares of Triton PCS Holdings Inc. (NYSE:TPC - news) fell $2.25, or 16.73 percent, at $11.29 on the New York Stock Exchange.
Shares of No. 5 wireless operator Nextel Communications Inc. (Nasdaq:NXTL - news) were off 88 cents, or 11.21 percent, at $6.97, Leap Wireless Inc. (Nasdaq:LWIN - news) fell $1.17, or 10.82 percent, to $9.64, and shares of AirGate PCS Inc. (Nasdaq:PCSA - news) were off $2.30, or 12.67 percent, at $15.85 on Nasdaq.
Triton, AT&T Wireless, Sprint PCS, and AirGate were among the top percentage losers. Shares of AT&T Wireless, AirGate, and TeleCorp hit all-time lows according to Reuters Analytics. On a broader basis the Philadelphia Stock Exchange's wireless telecommunications index fell 4.45 percent at 75.75.
``It is still an industry that needs external financing,'' Benton said. ``If you're not self-financing at this point, this is not a good time,'' he said.
Added Thomas Lee, wireless analyst with J.P. Morgan, ''There's a lot of fear out there. Fear is leading to paralysis. This is not even a half-empty-glass fear. We're talking glasses with holes in the bottom.''
Lee said the fear was unwarranted and pointed out that wireless bond prices have barely budged since the beginning of the year.
Analysts said the wireless sector may also be nervous about Sprint PCS' fourth-quarter earnings conference call later on Monday. Sprint PCS previously announced its fourth-quarter results, but analysts expect the company to lower its financial and subscriber targets for 2002. |
