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2005 Top Ten: Stock Gains and Pains

Craig Matsumoto
12/30/2005

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.

GAINS

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.

  • 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.

  • 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.

  • 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.

  • 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. PAINS

    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.

  • 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 .)

  • 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.

  • 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.

  • 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.

    — Craig Matsumoto, Senior Editor, Light Reading

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    yhza
    yhza
    12/5/2012 | 4:10:32 AM
    re: 2005 Top Ten: Stock Gains and Pains
    I bought RBAK at 5.37 in May and sold a few weeks later for a nice 20% gain only to watch it reach 14.

    I'm still pi$$ed so I just went short at 14.10

    Lets see how it goes :)
    jack grubman
    jack grubman
    12/5/2012 | 4:10:30 AM
    re: 2005 Top Ten: Stock Gains and Pains
    hmmm...i can ALMOST make Deloitte Technology into DoLittle Technology...I guess FiberNet is better at anagrams that I am.
    -Jack
    P.S. All this Lucent/Winstar press has really got me longing for the glory days. LR should've asked me about which stocks will be hot.
    Pete Baldwin
    Pete Baldwin
    12/5/2012 | 2:47:27 AM
    re: 2005 Top Ten: Stock Gains and Pains
    Well, that was quick: It's already been pointed out that we missed Orckit, the parent company to Corrigent.

    Jan. 1: $8.42 (adjusted for 3:1 split)
    Dec. 27: $23.44
    Change: +178.3%

    That puts it third, just behind NetLogic's 178.5%.

    Any others? Anybody you're disappointed didn't make it? I was so rooting for Google, just for the wackiness of a $200 stock gaining 100% in a year, but they fell just a couple of rungs short.
    icenine
    icenine
    12/5/2012 | 2:47:25 AM
    re: 2005 Top Ten: Stock Gains and Pains
    So who's owned the dogs? I snagged some digital lightwave back when OC192 was the future. In one quarter at the end of '99, it went from $7.50 to $55, and I sold. Then it went to $150. Ah, what fun!

    Now what did I do w/ the profits? Was that the Lucent or Avici stock purchase? Nevermind ;-)

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