Telecom Stocks Are Still Groping For A Bottom Managers note reversal of fortunes for gear makers, service providers.(MAKING MONEY IN MUTUALS)

Byline: Joanne Legomsky

Even in a collapsing stock market, telecom stocks have distinguished themselves by their singularly poor performance.

While the S&P 500 on Thursday was down 34% from its March 2000 peak, the telecom-cellular industry group tracked by IBD was down 68%, telecom equipment was down 83% and the telecom services group was down 82%.

Indeed, sector funds that emphasize tech and telecom also have been among the worst performers. For the 12 months ended Thursday, the average tech fund tracked by Morningstar Inc. was off 70%. The average communications fund was down 56%. Diversified stock funds were down 28%.

No Bottom Yet

Despite the carnage, some managers who specialize in the sector think it is premature to conclude that telecom stocks have bottomed. Duane Eatherly, manager of $50 million Heritage Technology Fund, believes we are in the throes of a cataclysmic sell-off.

So he is sticking with companies that have strong financial traits in sectors of the industry where capacity is being removed. He sees starkly different prospects for telecom service stocks and telecom equipment stocks.