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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Softechie who wrote (26000)	1/31/2002 5:10:19 PM
From: Justa Werkenstiff	Respond to of 99280

Softie: Re: "da bulls are wearing me out here..." Exhaustion is part of the process.

To: Softechie who wrote (26000)	1/31/2002 7:54:40 PM
From: Teri Garner	Respond to of 99280

More telecom companies may be headed for trouble (Reuters 01/31 14:04:24) By Yukari Iwatani CHICAGO, Jan 31 (Reuters) - The meltdown in the telecommunications industry is not over yet. After 18 months of restructuring, tens of thousands of layoffs, high-profile bankruptcies amid a battered economy, a decrease in customer demand and excessive capital spending, some companies are still not safely out of the storm while others may even be headed for trouble. This week both Global Crossing Ltd. <GBLXQ.PK> and McLeodUSA Inc. <MCLD.O> became the latest telecommunications companies to file for Chapter 11 bankruptcy protection as they buckled under high debt loads and flagging stock prices. Analysts and investors say they are now closely watching other companies that have focused on fast growth rates rather than revenue and profit and have high debt loads. "There's a lot of companies that are out there that are focused more on growth than on revenues, on expansion than on profits," independent communications analyst Jeffrey Kagan, said. "Those are the companies ... that are all facing the same kind of pressure." High-speed communications company Global Crossing struggled from a glut of fiber-optic network capacity, slack demand and declining rates for voice and data transmission services. Local telephone company McLeod also drowned in debt as it spent too much money to build more networks than it needed and demand for its services decreased. Last year, telecom upstarts such as XO Communications Inc. restructured balance sheets through debt for equity swaps, while Covad Communications Group Inc. and Rhythms NetConnections Inc. filed for bankruptcy. Covad emerged from bankruptcy on Dec. 20. According to calculations by the Fifth Third Technology Fund, the U.S. telecommunications industry, including local telephone, long-distance and wireless firms, is carrying total current debt of about $300 billion. Much of it has been used to build more network capacity than needed. Combined with external factors such as intensifying competition, tight spending by customers and the economy, the ramifications of that are crippling some companies. Broomfield, Colorado-based Level 3 Communications Inc. <LVLT.O> on Tuesday said it recorded a $3.2 billion asset impairment charge for the fourth quarter to reflect the drop in value of its networks. It also said revenues may fall short of levels required under a credit pact. Tulsa, Oklahoma-based Williams Cos. Inc. <WMB.N> delayed an earnings reports to reassess $2.15 billion in guarantees to its former unit Williams Communications Group Inc. <WCG.N>. "They hung on for as long as they could and now they're starting to topple like dominoes," said a portfolio manager of a large Midwestern mutual fund firm who asked not to be named. Henry Asher, president of New York-based money manager North Star Group blamed the current problems in part on the exaggerated hype by investment banks hoping to profit from bringing these fast growing companies to market with initial public offering deals. "It was just a combination of a perfect storm of greed, poor execution and borderline corruption," Asher said. More established telecommunications firms have been plagued as well. AT&T Corp. <T.N> and Qwest Communications International Inc. <Q.N> both gave dismal growth outlooks this week as they posted fourth-quarter losses on lower-than-expected revenues. WorldCom Inc. <WCOM.O> was hurt by market rumors that rating agencies would downgrade its debt. The North American Telecommunications Index <.XTC> has lost over half its value since it peaked in March of 2000 as investors lost confidence in the sector. As hard-pressed service operators cut capital spending to improve their financial situation, firms that supply network gear and other equipment have suffered from the rippling effect of a slowdown in demand for their products. Lucent Technologies Inc. <LU.N>, the world's largest maker of telecom equipment, has slashed jobs, cut money-losing products and sold noncore businesses over the past year in a bid to pare its operations, reduce debt and return to profits. Both Tellabs Inc. <TLAB.O> and Motorola Inc. <MOT.N> have reported a sharp drop in quarterly sales and earnings citing a slowdown in customer spending. The telecommunications downturn even caught up with the fast-growing wireless industry, which until mid-2001 had been considered to be immune. Bill Turner, equity researcher for BankOne Investment Advisors, said investors were shying away from wireless stocks because the industry, which is still in the growth stage, requires significant capital to build out its networks. "I still think it's a viable industry, but we are not in the market for that type of company right now," Turner said. Analysts and investors believe that the telecommunications industry will begin to recover later this year as the economy picks up and demand returns. "The question is 'Will it happen fast enough?'," Kagan said. "The problem is that revenues aren't there to cover the nut. Investment dollars aren't rolling in like they used to and it's very difficult to hold your breath," he added. ((--Yukari Iwatani, Chicago Equities News at 312 408 8787, chicago.equities.newsroom@reuters.com)) REUTERS S.RT GBLXQ-PK MCLD-O LVLT-O WMB WCG T Q WCOM-O -XTC LU TLAB-O MOT TEL.R ELC.R US.R PUB.R USC.R DBT.R MCLD LVLT WILC-L T-L ATT-R ATT-L WCOM WCOM-T TLAB MTRL-L MOT.-L J6686-J