Newspaper article The Christian Science Monitor

Telephone Stocks Dial for Growth

Newspaper article The Christian Science Monitor

Telephone Stocks Dial for Growth

Article excerpt

TRADITIONALLY, "telephone" companies such as American Telephone & Telegraph Company have been viewed as solid defensive stocks during years of economic difficulty. In bad times as well as during prosperity, businesses and individuals have to maintain communications contacts - although the growth in usage tends to fall off as the economy slows.

Today, the overall rule still rings true: Telecommunications stocks are considered a generally good long-range hedge against economic uncertainty. Moreover, the global telecommunications industry is poised for steady growth, both within the United States and abroad.

The challenge is that yesterday's "telephone company industry" has been replaced by a far more sophisticated "telecommunications industry" involved in such diverse products as cellular phones, space satellites, and voice-mail systems as well as local and long-distance phone services. Special care is required in identifying those companies - and sectors within the industry - showing possible growth, says Rao Chalasani, a market strategist with Kemper Securities Inc.

Mr. Chalasani says the global telecommunications industry will be a growth industry in the years ahead. "Society is continually becoming more information-oriented," he notes. Moreover, telecommunications services tend to grow along with economic expansion. Kemper Securities predicts the US economy will grow at a 2 to 2.5 percent rate next year, although Chalasani concedes there is a real risk of another downturn. "We're not quite as optimistic as we were a few months ago." But he says "Washington can be expected to do everything it can to boost growth well before the November {1992} election."

Examples of telecommunications firms that look promising over time, according to Chalasani, are California Microwave Inc. and Octel Communications Corporation. California Microwave is a leading supplier of satellite earth stations to the third world. Octel is a leader in voice information systems.

Joel Gross and Suzanne Becker track the telecommunications industry for Donaldson, Lufkin & Jenrette Inc. …

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