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Technology Stocks : Winstar Comm. (WCII) -- Ignore unavailable to you. Want to Upgrade?

To: doormouse who wrote (8139)	9/3/1998 6:13:00 PM
From: Pamela Murray	Read Replies (1) \| Respond to of 12468

From Communications Today September 2 By tom Leithauser, Senior Analyst Wireline Bell operating companies(BOCs) may be trying to shed their image as stable, boring monopolies. But that impression has helped shield them in recent days from a perilous stock market that has hammered their smaller rivals. The BOCs were one of the few groups that escaped the blood-letting Monday (8/31) that sent other telco stocks into the cellar. Analysts cited several reasons for the BOCs' immunity: They offer a vital service that consumers will purchase even in the worst of times. They dominate their markets. They offer high dividends and steady earnings. Their international exposure is insignificant, which leaves them unaffected by the global events that can shake other sectors. The BOCs' rivals, on the other hand, were among the first stocks to be sold when the market headed south. Consider what happened to Winstar (WCII), a competitive local exchange carrier (CLEC) in 27 markets. The company was trading in the low 30s just two weeks ago. Monday it closed at 18.25. Analysts said CLECs suffered because investors view them as risky and are unwilling to take a chance on them during uncertain times. "They don't have as much visibility," said Tony Ferrugia of A.G. Edwards & sons. "Some of them don't even have earnings yet. when the market is more uncertain, those are the stocks people leave first." Some analysts viewed the recent downturns as as opportunity to buy CLECs at fire sale prices. On Monday CS First Bosotn Corp. was advising clients to buy Winstar, arguing that last week's drop in price madi it more attractive. "We believe that there are many names in the CLEC and emerging long-distance group that are now at very attractive price levels," the brokerage said in a report to investors. Other analysts predicted the CLEC sector would remain depressed as long as markets were volatile. Low share prices will hurt CLECs that are hoping to borrow to finance their growth or use their stock as currency. Even large companies suffered. WorldCom (WCOM) lost 12.4 percent of its value Monday, dropping from 46.75 to 40.9375, while its merger partner, MCI (MCIC), lost 11.6 percent. There was no particular reason for the losses; the companies apparently were just dragged down be the market. Among the BOCs, BellSouth (BLS) was one of the best performers Monday with a 0.4 percent gain, while Bell Atlantic (BEL) was one of the biggest losers with a 2.4 percent drop. GTE (GTE) lost 2.0 percent - a small amount compared to the 6.4 percent plunge in the Dow. Equipment-maker Tellabs (TLAB) lost 13.8 percent, while Ciena (CIEN), which Tellabs is trying to buy, lost 9 percent. The downturn apparently had no immediate impact on pending stock-swap mergers, such as the Tellabs-Ciena purchase, except for decreasing their value. The value of the SBC Communications (SBC)- Ameritech (AIT) deal for example, is down 10 percent to $55 billion, while the price of AT&T's (T) pending purchase of Tele-Communications Inc. (TCOMA) is down 24 percent. The market bounced back yesterday (9/1), but there were few clear trends to report in the telecom sector. It appeared some investors were leaving the safety of the BOCs, which were slightly down, while others were looking for bargains among long-distance companies and CLECs, which as a group staged a mild recovery. Apologies for typos. Pam