2005 Top Ten: Stock Gains and Pains

The annual look at the top winners and losers among telecom-related stocks

Craig Matsumoto, Editor-in-Chief, Light Reading

December 30, 2005

8 Min Read
2005 Top Ten: Stock Gains and Pains

As recovery bells ring throughout telecom, it's time to look at who the winners and losers were on the stock market. Welcome to the annual review of the top ten stocks, good and bad.

To be considered, a company had to fit in the coverage turf of a Light Reading Inc. site -- that is, Light Reading, Byte & Switch, or Unstrung. So Krispy Kreme Doughnuts Inc. (NYSE: KKD), while vital to the fueling of the Light Reading empire, doesn't count. On a more serious note, neither does high-flying Apple Inc. (Nasdaq: AAPL) -- sorry, Mac culties. (Neither would have made the list anyway, but you get the idea.)

As usual, bankruptcies and liquidations don't count. (It just doesn't seem sporting to rank a stock's 100-percent decline.)

Because the rankings are by percentage change, the penny stocks are at an advantage. So this time, we've added a rule that a stock must have started the year at more than $1 per share. That's good news for sagging carriers Adelphia Communications and McLeodUSA Inc. (Nasdaq: MCLD), which were otherwise destined for the "Pains" list. The rule also knocked out the 200-percent gain of Occam Networks Inc. (Nasdaq: OCNW) -- which started the year at a paltry 9 cents per share.


Yes, the big percentage gains unfairly go to the smaller stocks. Some higher-priced issues came close to making this list, though. Google (Nasdaq: GOOG) climbed 120 percent to more than $400 per share, while Adtran Inc. (Nasdaq: ADTN) and Marvell Technology Group Ltd. (Nasdaq: MRVL) climbed roughly 60 percent each.

Enterasys Networks Inc. and magicJack VocalTec Ltd. (Nasdaq: VOCL) sported nice numbers, but they were the beneficiaries of reverse splits. Disqualified!

  • 5. tw telecom inc. (Nasdaq: TWTC)

    • Jan. 1, 2005 price: $4.36
      Dec. 27, 2005 price: $9.82
      Change: +125%

    Profits are at least a year away, by most estimates, but Time Warner Telecom has made some strides this year. Its enterprise business is growing, and that's good -- even if business-class VOIP is a pain, as a company exec noted in June. And Time Warner Telecom sees opportunity in the AT&T Inc. (NYSE: T) merger with SBC and the pending blending of MCI LLC and Verizon Communications Inc. (NYSE: VZ), as the deals could send large corporations shopping for better telecom pricing.

    • Megamergers Don't Scare TWT
      Time Warner Reports Q3
      TWT Reports Q2 Loss
      Telecom Exec: VOIP Is a Pain
      Time Warner Telecom Touts Wins
      TWT Narrows Q1 Loss
      TWTC Offers VOIP Business Services
      Tier 2 Carriers Eat Up Ethernet
      Time Warner Wins Ethernet Deal
      Time Warner Talk Fuels Sonus

  • 4. Rural Cellular Corp. (Nasdaq: RCCC)

    • Jan. 1, 2005 price: $6.23
      Dec. 27, 2005 price: $14.75
      Change: +137%

    The concept of rural cellular was hot this year, so why not "Rural Cellular" the company, too? Analysts thought the Alltel Corp. (NYSE: AT) acquisition of Western Wireless Corp. early this year signaled a coming surge in mergers for North American rural wireless, a sector packed with small companies. Rural Cellular didn't strike any deals, but its stock gave investors some pleasant news anyway. Fellow rural carrier Centennial Communications Corp. (Nasdaq: CYCL) (Nasdaq: CYCL) did well, too, charting 94 percent stock growth.

    • A Rural Renaissance?
      Rural Cellular Posts Q2
      Rural Cellular Posts Results

  • 3. Redback Networks Inc.

    • Jan. 1, 2005 price: $5.36
      Dec. 27, 2005 price: $13.84
      Change: +158%

    That's right: Redback! The company made the list of 2003 stock declines and barely missed the 2004 list, but Redback finally got its game in 2005. IPTV and the broadband edge ruled the day, with Redback scoring deals with the likes of BellSouth Corp. (NYSE: BLS). A reseller relationship with Alcatel (NYSE: ALA; Paris: CGEP:PA), which enjoyed some IPTV prosperity itself, helped too, as did occasional rumors of Redback getting acquired.

    We still contend it's not a good thing to undergo a bankruptcy filing and a 1-for-73 reverse stock split. (See Turkey Awards.) But Redback certainly seems to be making the most of its second chance, enough to garner it a Leading Lights award for Best Investment Potential.

    • LR Names 2005 Leading Lights Winners
      Redback, HP Partner
      Redback's DeNuccio: We Can Go It Alone
      Redback Boosted by TCV, Verizon Talk
      Wild Ride for Redback Shares
      Tellabs May 'Edge' Towards Redback
      Redback Shares Rock: What's Up?
      Redback's Anti-Panic
      Redback's SmartEdge Perks Up
      IPTV Alters Network Landscape
      Routers Answer IPTV Call
      Alcatel Names Its 21CN Partners
      Verizon Certifies Redback
      Redback Showing More Signs of Life
      How Redback Won BellSouth
      Redback Rallies on Q4

  • 2. NetLogic Inc.

    • Jan. 1, 2005 price: $10.00
      Dec. 27, 2005 price: $27.85
      Change: +179%

    It certainly seemed strange when NetLogic went public in 2004, considering the market for search-engine chips -- adjuncts to network processors -- hadn't been kind to any of the startups trying it. But NetLogic has the ear of Cisco Systems Inc. (Nasdaq: CSCO), and that's made for a nice business. NetLogic is profitable and enjoying a run rate of $80 million per year, based on September-quarter figures.

    • NetLogic Ships 500K
      NetLogic Posts Q3
      NetLogic Posts Q2
      NetLogic Soars in Q1
      NetLogic Micro Ships in Volume
      Extreme Picks NetLogic
      Netlogic Micro Announces Earnings

  • 1. Dobson Communications Corp. (Nasdaq: DCEL)

    • Jan. 1, 2005 price: $1.72
      Dec. 27, 2005 price: $7.45
      Change: +333%

    What were we saying about rural wireless? Oklahoma City-based Dobson is among the largest players there, and it claims to be the eighth largest U.S. wireless carrier, with 1.6 million subscribers across 16 states. Life isn't too bad for Dobson these days: It's got a former Nextel Communications exec at the helm, and it's hiring, albeit as the result of some restructuring in remote cities.

    • Dobson Buys Brand Name
      Dobson Completes Cingular Deal
      Dobson Roams with Cingular
      Dobson Adds 200 Jobs
      VeriSign, Dobson Team Up
      Dobson Picks Alcatel
      Dobson Names CEO


    Some Light Reading favorites just missed the list this year. Avanex Corp. (Nasdaq: AVNX), Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7), Covad Communications Inc. , UTStarcom Inc. (Nasdaq: UTSI), and Verso Technologies Inc. (Nasdaq: VRSO) all suffered losses in the 60 percent range, while Carrier Access Corp. (Nasdaq: CACS) -- the top gainer in 2003 -- dropped about 55 percent. That's downright sunny next to what happened to these folks, though:

  • 5. ITC^DeltaCom Inc. (Nasdaq: ITCD)

    • Jan. 1, 2005 price: $5.13 (adjusted for reverse split)
      Dec. 27, 2005 price: $1.15
      Change: -77.6%

    The caret company's shares were rallying as we approached deadline on Dec. 28. So, had we run the numbers one day later, it might have escaped a second consecutive appearance on the "Pains" list. As it stands, though, the carrier's year was a shade worse than that of Primus Telecommunications Group Inc. (Nasdaq: PRTL), which dropped 77.4 percent on the year.

    • ITC^Deltacom Approves Reverse Split
      ITC^DeltaCom Refinances Debt

  • 4. Digital Lightwave Inc.

    • Jan. 1, 2005 price: $1.26
      Dec. 27, 2005 price: 22 cents
      Change: -82.5%

    Another repeat winner, Digital Lightwave graced this list in 2003. The company underwent the usual signs of trouble this year, as founder Bryan Zwan stepped down as CEO -- for the third time -- and Nasdaq delisted its shares. It's all light years away from the company's glory days, which netted Zwan a pretty penny, according to Securities and Exchange Commission (SEC) filings in 2002. (See DIGL Founder: $348M in Insider Sales .)

    • Telecom Firms Get Twisted & Delisted
      DIGL Warned of Delisting
      Digital Lightwave Expands GigE Test
      Digital Lightwave Picks Interim CEO

  • 3. FiberNet Telecom Group Inc. (Nasdaq: FTGX)

    • Jan. 1, 2005 price: $8.80 (adjusted for reverse split)
      Dec. 27, 2005 price: $1.52
      Change: -82.7%

    Its Website proclaims FiberNet a "Deloitte Technology Fast 50" company. It's chalked up Equant N.V. , Internap Network Services Corp. (Nasdaq: INAP), and Savvis (Nasdaq: SVVS) as customers, and it wants to get into VOIP peering. But FiberNet faces a cash crunch, with just $2.3 million in the bank, according to a November SEC filing. Meanwhile, losses continue to mount -- to the tune of $11.7 million for the nine months ending Sept. 30, against $25 million in revenues. A 1-for-10 reverse split in May didn't help matters any.

    By the way, this FiberNet is different from Fibernet Group plc (London: FIB), a U.K. service provider.

    • Internap Selects FiberNet
      FiberNet Intros VOIP Peering
      Savvis Picks FiberNet
      FiberNet Touts VOIP Peering
      FiberNet Supplies Equant

  • 2. Newport Networks plc (London: NNG)

    • Jan. 1, 2005 price: 128 pence ($2.21)
      Dec. 27, 2005 price: 20.5 pence (34 cents)
      Change: -84%

    VOIP equipment's star has fallen, at least for some of the startups involved. Newport trotted out a flurry of small contract wins in the last half of the year, but it's in danger of losing the session border controller game to rivals such as Acme Packet Inc. (Nasdaq: APKT). It doesn't help that Cisco recently announced plans to integrate a session border controller into some of its routers.

    • Newport Edges Towards Target
      Newport Wins Broadnet Deal
      Newport Moves on Taiwan
      Newport Wins Australian Deal
      Kingston Uses Newport SBC
      Newport Signs Resellers
      Newport Secures Its SBCs
      Newtel Selects Newport SBCs

  • 1. Boston Communications Group Inc. (Nasdaq: BCGI)

    • Jan. 1, 2005 price: $9.24
      Dec. 27, 2005 price: $1.02
      Change: -89%

    The wireless revolution isn't being kind to BCGI, a provider of billing software for cellular networks. The company's stock was down about 50 percent already when, in May, it lost a patent suit filed by Freedom Wireless Inc. in 2000. A jury ordered BCGI and other defendants, including top customer Cingular Wireless , to pay $128 million -- "an amount which exceeds [BCGI's] ability to pay," according to BCGI's SEC filings. BCGI, which tallies annual revenues in the $100 million range, is preparing an appeal.

    • Ruling Hits Boston Comms's Q2
      Boston Comms Reports Q3

    — Craig Matsumoto, Senior Editor, Light Reading

About the Author(s)

Craig Matsumoto

Editor-in-Chief, Light Reading

Yes, THAT Craig Matsumoto – who used to be at Light Reading from 2002 until 2013 and then went away and did other stuff and now HE'S BACK! As Editor-in-Chief. Go Craig!!

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