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Utility workers also are investors

Some Allegheny Energy employees have expressed concern about the steep drop in the stock price and the Hagerstown-based company'

Some Allegheny Energy employees have expressed concern about the steep drop in the stock price and the Hagerstown-based company'

October 07, 2002|by LAURA ERNDE

laurae@herald-mail.com

For the 35 years he's been a lineman with Allegheny Energy, Joe Moser has invested in his company's stock.

So he has watched closely as the stock value - which makes up about 25 percent of his 401(k) retirement portfolio - has tumbled.

In the last six months, Allegheny's share price has dropped from a high of $45.53 to Thursday's close of $8.80.

Moser and several other employees interviewed last week expressed concern about the steep drop in the stock price and the Hagerstown-based company's financial future.

But they say they are holding onto the stock and expect the company to rebound from recent financial troubles.

"Every company has its ups and downs. To bail out of Allegheny? No. I've been here this long and I'm going to ride the tide," Moser said.

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Moser said he believed Allegheny was the victim of some bad business decisions. Executives jumped feet first into the energy trading market after deregulation, which has not paid off like they thought it would, he said.

"It doesn't take a rocket scientist to know ... they got too big too fast," said lineman Lance Nigh of Greencastle, Pa.

Last week, Moody's Investors Services downgraded the company's debt rating to so-called "junk bond" status, reflecting the company's deteriorating financial performance.

The debt-rating firm said the action reflected Allegheny's declining cash flow and earnings; its increased reliance on sales in the merchant power market, which Moody's expects to be depressed at least until 2004; and poor results from energy trading.

Allegheny's available cash has declined an estimated 80 percent since June 30, from $1.2 billion to $230 million, according to a Wednesday report by industry analyst Credit Suisse First Boston. The report said Allegheny will probably still be able to pay out its annual dividend of $1.72 per share although it will be under pressure over the next few months to reduce the payout.

With the climate in the energy industry, Allegheny Energy has changed its strategy in recent months in an attempt to improve its financial performance, company spokeswoman Cynthia Shoop said.

Allegheny is eliminating an unknown number of positions, accepting more than 600 early retirements and deciding whether to sell assets such as power plants and long-term power sales agreements, she said.

Before the company began accepting early retirements, Allegheny had 6,000 employees in 15 states. Of those, 577 employees worked in the Tri-State area.

At age 56, Moser said he has no plans to retire soon.

But he doesn't have as much time for the stock to recover as do employees like Nigh, 32.

Nigh also plans to hold onto his stock, although he said he and other employees are disturbed by the company's sudden downturn.

"We talk about it every morning and we talk about it every evening. It's a scary time," Nigh said.

Nigh said he has thought about the parallels to Enron, whose employees lost their retirement accounts when the company folded under the weight of an accounting scandal.

The difference, said lineman Phillip Hutzell, is that Allegheny has not done anything illegal.

"I don't believe there's any wrongdoing. It's been a good company," said Hutzell, 45, of Boonsboro.

The Associated Press contributed to this story.

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