At Dobson, a Death-Defying Rebound

Less than a year ago, Dobson Communications (DCEL Quote) was starting to seem as lifeless as a pocket of dead air.

The wireless telephone company had long shed the premium it enjoyed as a strong rural provider with even stronger partners. The company had, in fact, lost its Nasdaq listing altogether and was trading for pocket change on the loosely regulated over-the-counter bulletin board. By last October, Dobson was fetching only 16 cents a share and appeared to be headed for bankruptcy.

But the stock -- then as faint as a dying cell phone signal -- suddenly began to strengthen. Today, relisted and trading for more than $4, it clearly has roared back from the abyss. And investors' rediscovered love for growth-promising tech plays isn't all that's changed for the Oklahoma City company.

"They've turned the corner on profitability," explains Loop Capital's Greg Gorbatenko, the only analyst who still provides equity coverage of the company. "It's a good comeback story."

The Abyss

These days, Dobson talks easily about "profitable growth" and its upbeat view of the future. And investors no longer need to tune out the clang of persistent warning bells when they tune in to the company's comments. Their biggest fear, after all, has already passed without event.

The bank didn't snatch the keys to the company.

"At the end of the day, the bank had to decide whether it wanted to own Dobson or become its partner," explained Bob Rader, senior vice president of Capital West Securities in Oklahoma City. "This way, the bank has a shot at getting its money back."

Ringing Endorsement Dobson rebounds

On the surface, Dobson's situation sounds almost familiar. Huge debt loads, coupled with a telecom industry meltdown, have left many wireless players withering near extinction. But Dobson managed to jump in hotter water than some. The company's largest shareholder -- a partnership owned by the Dobson family -- put the entire company at risk by pledging its majority stake in Dobson as collateral for a huge personal loan.

Short-sellers pounced upon discovering the loan in late 2001. And their attack, while brief, came at the worst time.

"They basically came in and left in three days," recalls Warren Henry, the company's vice president of investor relations. "But they jumped in right before Sept. 11. And after that, the entire sector got trashed."