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Telecom-Related Stocks Fall on Earnings Woes

September 28, 2000|From Bloomberg News

The hammering of telecom-related stocks reached a milestone of sorts Wednesday: The market capitalization of Lucent Technologies dropped below $100 billion for the first time in almost two years.

Many other telecom stocks fell further Wednesday on worries about sales and earnings growth in the near term.

Shares of Lucent (ticker symbol: LU), the No. 1 phone-equipment maker, slid $1.63 to $28.88. That put the company's market cap--stock price times shares outstanding--at about $96 billion, the lowest since October 1998.

At its record high of $84.19 on Dec. 9, 1999, investors valued Lucent at about $264 billion.

Lucent warned investors in January and July that it wouldn't meet sales and profit estimates. Sales of new products the company is betting on to challenge rivals including Nortel Networks Corp. (NT) so far have failed to offset a slowdown in its traditional business of selling phone switches.

But sellers hit Nortel as well Wednesday, sending it down $5.75 to $59.63. Also, fiber-optics-related firms Corning and JDS Uniphase were down sharply. Corning (GLW) lost $15 to $310; JDS (JDSU) slid $5.31 to $97.75.

Investors are concerned about more than the equipment suppliers. Shares of long-distance giants also have been crushed in the market as profits disappoint.

AT&T Corp., which spun off Lucent in 1996, also may see its market value fall below $100 billion. AT&T shares fell 25 cents to $27.63 Wednesday, their lowest since September 1997, and have dropped 46% this year.

AT&T currently is valued at about $104 billion.

Telecom-equipment stocks have been falling for weeks on concern that companies that run phone networks will cut back on their spending, said Walter Casey, analyst for Banc One Investment Advisors.

"At some point that just is not good for people who provide telecom equipment," said Casey. Also, the supply of both network equipment and network-equipment stocks is increasing, he said, noting the many IPOs from that sector this year.

But even some of those new issues, such as ONI Systems (ONIS), are falling: ONI lost $4.50 to $85.50 Wednesday.


Trouble on the Line

Shares of telecom equipment giant Lucent Technologies slumped Wednesday to their lowest since 1998.

Monthly closes and latest for Lucent Technologies (ticker: LU) on the New York Stock Exchange

Wednesday: $28.88, down $1.63

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