My husband and I own shares of Lucent Technologies Inc. We've held these many years. What is the outlook for this company? - M.L., Chicago
Long-term shareholders in this giant telecommunications equipment maker have seen fire and rain.
Shares of Lucent (LU) are up 43 percent this year, adding to a gain of 125 percent in 2003. But that stellar performance follows declines of 75 percent the year before, 53 percent in 2001 and 81 percent in 2000 as the telecom industry suffered through its worst slump in history.
In Lucent's battle for survival, it let two-thirds of its employees go and cut back development efforts. This led to its first quarterly profit in three years during 2003, and management is now predicting sustained profitability beginning this year.
Optimists are banking heavily on revived spending by the telecom industry, with Lucent benefiting from sales to both wireless and conventional telephone companies. Revenue gains are potentially explosive. New wireless number-portability rules, photo-swapping capabilities and a need for improved quality mean firms will be shelling out more money for equipment.
This company, spun off from AT&T; in 1996, has been a long-term supplier to large carriers such as Verizon and AT&T; because it can provide any network gear necessary.
Lucent recently made a deal to expand the third-generation network of VIVO, the top cell-phone carrier in Brazil, which is the world's seventh-largest wireless market. It won important contracts in China and India thanks to its market leadership in DMA wireless technology. In the United States, Lucent was chosen to head up Qwest's network modernization plan and supply a new generation of local telephone switches.
Yet, the company still carries financial risk, its industry can be volatile, and its past financial projections have often been overly upbeat. Opinions about it vary.
Lucent shares receive a consensus "hold" from Wall Street analysts who track them, according to the Boston-based Thomson Financial. That consists of three "strong buys," three "buys," 20 "holds," seven "sells" and two "strong sells."
Earnings are projected to increase 33 percent in 2005. An average annual gain of 8 percent is predicted for the next five years, vs. the 14 percent forecast for the communications technology industry.
I have several old stock certificates. How can I research them? Are there companies that do this? - AE, Worcester, Mass.
Most old stock certificates found in desk drawers or attics are worthless.
Hundreds of mining companies failed early in the last century. Countless utilities, carmakers and department stores didn't survive the Depression.
There are, however, some companies that merged, changed names or exited bankruptcy with their old certificates retaining value. In addition, a very few certificates have historical or artistic worth separate from their investment value, with potential for sale at shows or online auctions.
Here are steps to determine the value of your certificates: Go online to run a search on the firm's name or ticker symbol.
Contact a local stockbroker. If the transfer agent listed on the certificate is still in business, it might also assist.
The secretary of state where the company was incorporated may have current status and last known address. Many don't charge for this. Visit the site of the National Association of Secretaries of State at www.nass.org.
For publicly traded companies, recent filings are found on the Securities and Exchange Commission's Edgar database at www.sec.gov. A number of research books can also be found in public libraries, such as the Robert D. Fisher Manual of Valuable & Worthless Securities.
There are private search companies that, for a fee, research certificate value. These include Scripophily.com (888-STOCKS6); Smythe & Co. (800-622-1880); Stock Search International (stocksearchintl.com and 800-537-4523); and Paperchase International (514-482-3609).
"We tell you what happened to the company, whether it was acquired, how to get in touch with who acquired it, or if it went out of business," explained Bob Kerstein, chief executive of Scripophily.com in Fairfax, Va., which charges $39.95 per certificate search. "If there's collectible value, you can send us a copy of it and we determine what we'd offer for it."
Scripophily.com has one extremely rare Edison Manufacturing Co. stock signed by Thomas Edison that is valued at $4,995.
I'm 60 years old, married and plan to retire in the next five years. I'm considering Gabelli Equity-Income Fund. What do you think of this fund? - N.C., via the Internet
It's stable. If that's your primary goal, it should suit you well. Just don't expect neck-snapping performance.
The $257 million Gabelli Equity-Income Fund (GABEX) rose 24 percent over the past 12 months and had a three-year annualized return of 6 percent. Both rank in the lower one-third of all mid-cap value funds.
"It's not a bad fund and investors needn't worry about it, but I don't consider it the best in Mario Gabelli's lineup," said Langdon Healy, analyst with Morningstar Inc. "A fund that gives exposure to what Gabelli and his research team excel at - media, telecommunications and industrial stocks - would be a better choice."
The annual expense ratio of 1.49 percent is also a little steep.
Gabelli runs a diversified portfolio that often devotes a significant portion of assets to dividend stocks such as utilities. The fund started paying out dividends on a monthly schedule in April 2003, which is great for shareholders seeking more frequent income payments. This emphasis on income also cushions it against losses.
Among the largest group concentrations in Gabelli Equity-Income's portfolio, financial services represents 18 percent, utilities 16 percent and consumer goods 14 percent. The top stocks were recently Pfizer, Eli Lilly, Exxon Mobil, Royal Dutch Petroleum, Genuine Parts, Texas Instruments, American Express, Energy East, CSC Holdings and General Electric.
This "no-load" (no sales charge) fund requires a $1,000 minimum initial investment.
Andrew Leckey is a Tribune Media Services columnist. E-mail him at firstname.lastname@example.org.