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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (19651)	6/11/2002 7:44:49 PM
From: EL KABONG!!!	Read Replies (1) \| Respond to of 74559

Hi Jay, unless telecom starts trading at 10% dividend yields before hand I doubt that will happen. With reduced cash flow, reduced revenues and staggering debt loads, I fully expect to see dividends slashed or eliminated in most teleco plays. Already there has been some belt tightening in this area. It's a catch-22 situation for the telecoms. If they eliminate the dividends, then the institutional investors that have the stock(s) in their income funds (or growth and income) must sell them, placing downward pressures on the stock price. If they continue to pay the dividends, then the yields rise (because the price of the stock has been in free-fall) and they sorely need the cash to fend off irate debt holders worried because some "desirable" telecom corporate bonds now trade at less than 70 cents on the dollar. It's a case of the lesser of two evils, and in this case, I think that they'll eventually opt to eliminate or severely curtail the dividends. Just an educated guess though... I haven't really heard much talk about this yet, though I suspect that it will become a mainstream topic for CNBC sometime soon, as folks that invest for income realize that they're not earning what they used to earn on their bond/income portfolios. KJC