Baby Bells' stocks fall on earnings, growth worries

PHILADELPHIA - Shares of three Baby Bells dipped to year lows Monday as investors extended a selloff triggered last week when some of them reported anemic earnings and lowered their 2002 financial forecasts. <br> <br> Given the soft economy and increasing competition, larger concerns about the regional Bells&#39; growth prospects also weighed on the stocks. <br> <br> &#34;I think what you&#39;re seeing is a longer-term reevaluation of all the (Baby Bell) stocks,&#34; Robertson Stephens analyst James Friedland said. <br> <br> Investors are worrying that the Baby Bells may not be the safe havens they once were, with post-recession growth expected to be slower than before the recession and increased competition for local phone-service customers, he said. <br> <br> &#34;Each line of the (Baby Bells&#39;) business is under competitive pressure,&#34; Friedland said. While the companies are &#34;very strong, stable businesses,&#34; the market has started to realize that competition and slow growth are affecting them, he said. <br> <br> BellSouth Corp. traded Monday afternoon at $30.98 on the New York Stock Exchange, down 39 cents or 1.2 percent, after earlier hitting a low of $30.25. SBC Communications Inc. changed hands at $31.62, down $1.10, or 3.4 percent. It hit $30.75 earlier; both had previously reached year-lows on Friday. <br> <br> Verizon Communications changed hands at $40.15, down $1.85, or 4.4 percent, breaking a previous 52-week low hit on April 11. <br> <br> Smaller Bell regional company Qwest Communications International Inc., which faces the same competitive pressures as its brethren, plus other problems, including high debt and a Securities and Exchange Commission probe into accounting practices, was off more than 6 percent at $6.18 a share, but didn&#39;t hit a 52-week low. <br> <br> While Baby Bells have fared betters than other companies in the troubled telecommunications industry, they&#39;re now proving vulnerable to economic and competitive pressures as well. Analysts cited competition from wireless, cable and other phone companies for the Baby Bells&#39; local phone-service customers. <br> <br> Qwest, BellSouth and SBC all gave investors cause for concern last week. A major asset sale helped boost BellSouth&#39;s first-quarter earnings 30 percent year-over-year, the company reported Friday, but excluding special gains and charges, BellSouth&#39;s profit per share of 54 cents was flat and missed analysts&#39; consensus estimate by 2 cents a share. <br> <br> SBC last week reported declining revenue and a 2-cents-a-share loss for the first quarter, in part because of a writedown, though operating earnings were in line with analyst estimates. The company maintained its 2002 earnings targets but said weak demand will make it difficult to meet revenue goals. <br> <br> Qwest cut 2002 revenue projects by $1 billion and trimmed its estimates for earnings before interest, taxes, depreciation and amortization. Earlier this month, Verizon warned it would miss analysts&#39; first-quarter earnings estimates by 2 cents a share. <br> <br>