Stock of Touch America Holdings Inc. of Butte fell another 19 percent Thursday closing at a new low of 79 cents. It was the second day in a row the stock closed under $1.
The telecommunications stock dropped 66 percent in two consecutive days after Wednesday's news the company lost $30 million in the second quarter and still paid four top executives $5.4 million.
The volume of trading was enormous Thursday, nearly 23 times the daily average.
The good news is that the state of Montana has no investment liability with Touch America.
Bob Bugni, a senior investment officer with the state Board of Investments, said Montana sold out of the stock about five months after the deregulation bill passed the legislature.
"We sold out MPC stock in September of 1997. Montana owned 220,000 shares worth $5.72 million," Bugni said. "Prices were moving up and we thought it was fairly valued. And we certainly didn't understand the fiber optics side of the business."
The state netted a $900,000 gain on the sale, he said.
All of the bonds owed the state have been paid back. Bugni said Montana netted a $300,000 gain on the last $9 million note paid off in May 2000.
The investments board sold all its WorldCom stock six months before the company tanked, selling for a $29 million loss on a $42 million purchase price. But the state didn't ride the stock to the worthless column.
Montana also sold its Enron stock before that company filed for bankruptcy last fall and made a $23 million profit.
Meanwhile, a Montana-based brokerage firm that has consistently back the company through its transition from a utility to a telecommunications company dropped its recommendation to a "neutral" Thursday.
D.A. Davidson senior analyst Jim Bellessa rated the stock as a "strong buy" from March 2001 until nine days after it converted into a telecom last February. Then he said downgraded the Touch America stock a notch to a "buy" for speculative investors.
On Thursday, the Great Falls analyst rated the stock a "neutral" based on eight concerns. He said the company has had "very mediocre success" in signing up new customers, growing expenses in legal battles with Qwest Communications. Bellessa also is concerned about "questionable employment agreements and stock options" and the three-year contracts that the board of directors gave four top executives on Wednesday.
If a stock trades under $1 for 30 consecutive days and other conditions are met, it may be delisted or kicked off the New York Stock Exchange.
Touch America spokesman Cort Freeeman said it would be too speculative to comment now on a potential delisting. Jan Falstad can be contacted at (406) 657-1306 or at firstname.lastname@example.org