Shares of
WorldComsank Monday for the sixth time in the last seven trading sessions, pressured by
concerns about the financial condition of its chief executive and the phone industry in general.
In mid-afternoon action, WorldCom (
WCOM was down $1.81, or nearly 19 percent, to $7.80. It was the most actively traded equity in the Nasdaq stock market, with more than 80 million shares changing hands.
Since last week, WorldCom stock has plunged more than 37 percent and touched repeated 52-week lows.
Investors are worried about the huge personal debt of CEO Bernie Ebbers. There had been talk that he might be forced to sell company stock in order to meet margin calls, exerting downward pressure on WorldCom.
Still, Comack said some investors "aren't comfortable" with a situation in which a company CEO has such a large debt, much of it backed by the company itself. The Enron scandal, he argued, "has created an environment" that fosters suspicion of the financial practices of .big corporations.
Such suspicions have been particularly evident in the debt-laden communications sector, which has been hit hard by a slew of high-profile bankruptcies.
Later this week, WorldCom is also expected to issue fourth-quarter earnings and updated forecasts on 2002 results. Investors hope the company will address lingering concerns and alleviate pressure on its stock.
WorldCom is expected to earn 14 cents in the fourth quarter
Ciena (CIENwhose shares dropped 13 percent to $10.43 after ABN-Amro analyst Kenneth Leon downgraded the stock to "hold" from "add" since several larger rivals already have issued weak outlooks for the next quarter.
He also doubled his 2002 loss estimate to 26 cents a share, and cut his 2003 earnings-per-share forecast to 7 cents from 13 cents. "Absent profitability in 2002, we believe management will have to capitulate and take necessary cost cutting to achieve breakeven,"
Chip stocks ascended after Goldman Sachs raised its rating on the capital equipment segment to a "market overweight" from a "market weight" on belief that orders will increase over the next several quarters. However, Goldman said that gains in the group wouldn't be as strong as in previous cycles due to current valuations.
In addition, the Semiconductor Industry Association reported that global chip sales were flat in the fourth quarter from the third quarter, ending three quarters of double-digit declines. Sales in the Americas, Europe and Asia-Pacific regions rose 3.7 percent in the fourth quarter on a sequential basis while Japan saw sales fall 11.8 percent in the quarter.
Priceline.com (PCLN shares dipped more than 16 percent to $5.28 after disclosing that it expects to break even or earn 2 cents a share in the first quarter and bring in revenue of $260 million to $290 million. Analysts polled by Thomson Financial/First Call had been expecting a 2-cent profit on revenue of $299.4 million.
Amazon.com (AMZN also trended lower, by 7 percent to $12.77. A report in the Wall Street Journal's "Heard on the Street" column questioned the company's liquidity.
Shares of Tyco International dropped as much as 17 percent Monday on concerns about the company's earnings and its ability to borrow money after it said it plans to tap its bank credit line to repay $4.5 billion in commercial paper debt.the Bermuda-based company will borrow from its existing $5.9 billion bank credit line to fund the debt retirement. In effect, Tyco is switching its short-term debt for longer-term obligations, boosting its interest costs. Commercial paper has an average maturity of 30 days.Tyco expected to use a projected $4 billion in cash flow to reduce debt.
The company detailed costs of its numerous deals, including a total of some $4 billion in cash on acquisitions considered too small to be material in fiscal 2001, to investors,
Gold futures topped $290 an ounce as the industry's shares rocketed to an eight-month high
