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One year ago, the telecommunications sector was red-hot. What’s changed? The sector is still surging-think Qualcomm’s more than 2,600% climb during 1999-but the ride is a bit bumpy.
Case in point: the gap between Moore’s picks IDT Corp. (Nasdaq: IDTC), which returned an amazing 124.52% for the year, and Pacific Gateway Exchange (Nasdaq: PGEX), which spiraled down 14.76%. Led by IDT, the portfolio stayed in the black with an overall return of 14.46% for the year despite negative returns for the rest of the picks.
Moore, formerly with BT Alex. Brown (now Deutsche Banc Alex. Brown) in Baltimore, was unavailable for comment, but recent events surrounding his stock picks speak for themselves.
Moore’s first pick, long-distance provider AT&T (NYSE: T), slid down 1.71% despite high expectations after its merger with cable giant TCI. In fact, the stock has increased recently after tumbling over 25% since early 1999. To regalvanize investors, AT&T plans to offer a tracking stock this spring, which will track the performance of its wireless, cable and Internet operations.
BellSouth (NYSE: BLS) dipped into the red, down 7.14%. Investors know this Atlanta-based local phone company as the bidder for Sprint that lost to MCI WorldCom. However, keep an eye on MCI as it continues to search for a national wireless unit.
Global TeleSystems (NYSE: GTS) is the most extensive network and service operator across Europe today. GTS slipped 7.21% for the year. Although competition in this market has heated up, the company’s receipt of several “best wholesale carrier” awards from trade associations in 1999 could boost future performance.
MCI WorldCom (Nasdaq: WCOM) fell 6.95%-not as bad as the dips that occasionally were almost 10% in late 1999. Also, investor skittishness over cutthroat long-distance pricing policies continued. However, its $129 billion acquisition of Sprint gives the company a nationwide wireless network, so MCI could rebound.
IDT-a multinational carrier, long-distance telephone company and Internet service provider-should further benefit from its recent alliance with ePhones.com to sell its DSL service (which provides high-speed Internet access) throughout the U.S. And Pacific Gateway, the laggard of the group (it fell 66% between January and September of 1999), has swooned from industrywide pricing pressures and ballooning corporate costs.