Mixed messages

Telcos seem to be trying harder than ever to please Wall Street, but the early returns indicate that investors don't appreciate the effort.

Recently, long-distance carriers abandoned their core revenue stream of voice services to pronounce their focus on data-oriented services. We only hope the strategy is executed more effectively by the IXCs than by the many CLECs that have ridden the data horse to the brink of bankruptcy.

In making the move to data, most of the IXCs have announced significant restructurings that parcel the companies' assets into morsels that analysts said would be more palatable to investors, who supposedly have long desired more easily identifiable stocks. So far, however, the restructurings of AT&T and WorldCom seem to have engendered far more doubts than confidence - a scenario that would have seemed improbable a year ago.

At the time, AT&T's C. Michael Armstrong and WorldCom's Bernie Ebbers were riding high, and each word they uttered was treated with respect - even by those who disagreed with their plans. Today, questioning their every move seems to be par for the course, even when they take actions that are in line with the advice of Wall Street pundits such as eschewing the notion that their firms should be all things to all consumers.

It's hard to imagine that all the telecom "geniuses" that existed in the spring suddenly got stupid, but only that kind of transformation would seem to explain the bottom dropping out of so many stocks. While the GST and ICG stories of bankruptcy exist, there are plenty other tales of companies reliably providing services reliably to growing markets.

In particular, the argument that the IXCs' vertical integration strategies were misguided seems especially hollow. After all, investors regularly applaud ILECs investing time and money to enter the supposedly barren long-distance market as quickly as possible. Jumping through regulatory hoops will allow them to offer the bundles that the IXCs were punished for wanting to offer.

On the other hand, every time one of these incumbents decides to make investments in data-oriented technologies such as DSL - something investors want IXCs to do - their stocks get hammered.

Admittedly, each case has its own set of circumstances, but there seems to be separate sets of logic being applied in the investment community.

Then again, maybe there's just no way to satisfy the whims of Wall Street during this downward turn in the market. Whether the reasons are justified or not, it appears the golden boys of telecom have lost their shine with investors, and there's no indication when - or if - Wall Street will let them get it back.