Telecom waits to fly again after crashing back to earth

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nly a Wall Street in the most delirious throes of a telecommunications and Internet mania would turn a company selling $50 million a year into a stock worth $10 billion.

So when investors finally caught on to the fact that the 1997-2000 telecom boom was probably only a once-in-many-lifetimes event, shares of Sonus Networks came crashing back to earth, losing nearly 87 percent of their value in the 12 months that ended March 31.

Along the way, investors reset Sonus's market capitalization to a far more rational level of about three times its actual sales.

Sonus was one of the early leaders among start-ups that build dramatically cheaper, more efficient switches for moving voice calls by converting them to the same "packet" format in which Internet traffic moves. In the long run, most big, established phone companies, including Verizon Communications, SBC, and AT&T, expect to move to the "voice over Internet" protocol instead of using dedicated circuits.

But in the months leading up to and after Sonus's May 2000 initial public offering, the main buyers were only start-ups or newer competitors that have run into financial trouble, such as XO Communications and Qwest, or companies that have actually gone bankrupt, including Global Crossing and Williams Communications.

Last year, Sonus more than tripled its sales, to $173 million, but has scaled back growth projections. Many investors dumped shares as they grew anxious over having no clear indication of where Sonus's sales growth will come from and when, and whether its $125 million IPO cash trove will last long enough to keep the company alive until then.

Chief executive Hassan M. Ahmed, a veteran of Cascade Communications, was brought in by venture backers to run Sonus in 1998. He remains optimistic.

"We increased our leading market share position in every quarter," Ahmed said, while investing $65 million in research and development last year to prepare for growth -- whenever it resumes.

PETER J. HOWE