Chicago-area stocks have not gotten off to a particularly good start in 2003.
As market benchmarks look to break the first three-year losing streak since World War II, the biggest local companies endured a rocky first quarter, with a few, mostly limited, winners and some significant losers.
Overall, blue chips slipped in the quarter, with the Dow Jones industrial average down just over 4 percent and the benchmark Standard & Poor's 500 index off 3.6 percent. One area of strength, relatively speaking, came from the beleaguered technology sector, with the Nasdaq composite index eking out a small gain.
But many of the 50 largest public companies in the Chicago area would have been thrilled with those results: Nearly three-quarters lost ground in the quarter, and a third of them fell 10 percent or more.
In the past 12 months, the results are even more depressing: Half are down 20 percent or more, and nearly a third have fallen more than 40 percent.
Even within sectors that displayed some strength overall, the results were mixed at best.
While technology mutual funds were among the quarter's best performers overall, according to data from Chicago fund-tracker Morningstar Inc., telecommunications continued to suffer, posting some of the worst results of major sectors.
That was reflected among local companies. Naperville-based Tellabs, for years one of the best-performing Chicago-area stocks, continued its once-unimaginable slide, falling more than 20 percent for the quarter and nearly 45 percent over the past 12 months.
"Investors are looking for some signs that the telecom equipment market is recovering," said A.G. Edwards analyst Gregory Teets, who has a "hold" rating on Tellabs. "It's more of a top-line [revenue] story," he said. "They've done a great job on the balance sheet."
Strength on balance sheet
Indeed, the stock slide can seemingly only go so far. Although revenue sank from $3.4 billion in 2000 to $1.3 billion last year, Tellabs has a strong balance sheet: Its stock ended the quarter at $5.79 a share, but Tellabs had nearly $2.50 a share in cash at year's end and no debt. Its assets, less goodwill and all liabilities, were valued at just under $4.50 a share.
With Tellabs' more than $1 billion in cash, and a market cap under $2 billion, investors are "not paying a whole lot for the enterprise," Teets said. "But you still have to keep your eye on the top line."
Schaumburg-based Motorola, another battered tech stock, fared a bit better but still underperformed the Nasdaq index, dropping 4.5 percent for the quarter. It was unable to capitalize on a mini-rebound in the semiconductor area, which saw Intel among the leading gainers among the Dow industrials.
But, Teets said, Motorola's greater consumer focus, through cell phones and its semiconductor sales to the auto industry, provides hope.
"In that sense, maybe Motorola in the near term has a better chance to grow revenues than someone like Tellabs," he said.
Overall, many of the leaders in the tech area were some of its biggest names, including Intel, Dell Computer and Yahoo.
"It's the visible names that people have reacquainted themselves with in the past quarter," said Lipper Inc. research analyst Jeff Tjornehoj.
"These were companies that were not going to go away anytime soon," he said, and were poised to rebound after nerve-racking drops.
One local tech leader, Zebra Technologies, is less of a household name, but well-positioned: The Vernon Hills-based bar code technology firm, with consistent profitability and a strong balance sheet, posted double-digit percentage gains for the quarter and 12 months.
Winners scarce among big area firms
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