Montana Power Co. stock was conspicuously featured in the July 30 issue of Business Week, but the mention in the prestigious weekly was not positive news for the Butte-based corporation.
Four years ago, MPC turned its back on its core business, being an energy utility, and embraced the then-hot telecommunications sector.
Since that corporate decision, the energy sector has bloomed. The telecom sector has bombed.
In a commentary entitled, Company stock could sink your ship, by Lewis Braham, a graph featured 10 stocks that are doing poorly.
Montana Power was in the middle of the bad pack with total returns for the previous year of a minus-63 percent as of May 16.
The commentary quotes a Fidelity Investments study that looked at 7,000 defined-contribution plans that offer ownership in their own companys stock. The study found that the average plan has nearly one-third of total assets invested in its own stock.
According to this article, MPCs retirement plan for its employees has 36.6 percent of total assets in MPC stock.
This strategy is a powder keg, Braham writes, because, companies may lay off workers as stock prices and earnings slide, destroying both jobs and nest eggs.
The list reported each companys negative one-year total return as follows: Owens Corning, (-87.2 percent), Lucent Technologies (-80.0 percent), Nortel Networks (-76.4 percent), Corning (-67.9 percent), Montana Power (-63.0 percent), Hewlett-Packard (-63.0 percent), Sprint Fon Group (-62.3 percent), Computer Sciences (-58.0 percent), PG&E Corp. (-53.0 percent) and Dell Computer (-50.9 percent).
Montana Power executives will announce second quarter results on Wednesday. The sure-to-be-lively special shareholders meeting is scheduled for Sept. 14 in Butte.
At the meeting, shareholders will be asked to approve the sale of MPCs last energy business, transmission and distribution lines, to NorthWestern Corp. of Sioux Falls, S.D. If that motion is approved and some regulatory approvals come through, MPC will become Touch America, a company specializing in telecommunications.
MPC stock closed at $10.03 Tuesday. The stock reached its all-time high of $65.75 for a few hours on March 29, 2000, and has averaged a high of $39.94 over the past 52 weeks.
Touch America and Montana Power spokesman Cort Freeman of Butte said the companys stock has fallen because the corporation is in the middle of its transformation from energy to telecommunications.
He defended the companys retirement package, including MPC stock.
The Montana Power 401(k) plan has offered a generous matching provision that compares very favorably with the industry, Freeman said. In addition, we have a very competitive pension plan as well. We dont just have one choice. We have a diversified 401(k) plan.
Mountain Man whispersLast weekends mountain man rendezvous in Red Lodge produced entertainment and a couple of memorable quotes.
One vendor was overheard telling a buyer, I need your name and your physical address.
Does that mean we have different metaphysical addresses? What kind of address could there be?
A sign above some tanned hides offered a cool drink on a hot day.
It read, Cold pop 50 cents. Guaranteed 4 degrees colder than your mother-in-laws kiss.
Jan Falstad can be contacted at (406) 657-1306 or at email@example.com